203k house hack with a pre-foreclosure home

[James Shinn]

Hi All, 

I'm curious if anyone has been able to pull off a 203k loan on a pre-foreclosure home. As with most new members, I've listened to the podcasts religiously and have my thoughts stirring about how best to get into the house hacking game. My goal immediately is not to transition to real estate, I enjoy my job but hate paying rent in Minneapolis ($1,250 for a 700sq ft 1 bed 1 bath!) and would prefer to get into a duplex or triplex in the next year. My thought is if I start speaking with community banks now, start diving into listsource to generate leads and start speaking to motivated sellers I should be able to find one deal in the next 12 months. My reason for wanting to use a 203k loan is my budget is nonexistent, I will be saving hard while still paying off student loans and eliminating frivolous spending. The small down payment and the ability to include renovation costs excites me. 

My biggest fear is the timing between having a seller who needs to get out from their mortgage quickly (preforeclosure) and the length of time it takes for a 203k to go through. I've heard horror stories of these dragging on forever, I don't want to turn sellers off due to the time it takes. 

I'm hopeful that someone here has done this before either successfully and has positives to say, or unsuccessfully and can help talk me out of getting into a bad situation. 

Thank you, and if you're in the Minneapolis area let me know.

-James