Single fam House not Completely Converted to Duplex- Will it FHA?

[Eliza Alexa]

Single family 2 level home, separate electric meters, separate HVAC. However, to enter the upstairs unit one must access front door which opens into the downstairs living area. Can this area be walled off to create a foyer entry so that downstairs has it's own door to exit their living area into the foyer in order to access front door leading outside & upstairs unit would have access to foyer by coming down the stairs to the foyer to access front door leading to outside also? Must this be converted to true duplex if so how??? Will FHA 203k allow this, how does one make this happen & what rough price range to expect?

It seems like an uncomplicated process in theory but then again- I know NOTHING about construction/FHA or even investing except what I learn on BiggerPockets.

[Minna Reid]

Is it zoned for multi family?

[Eliza Alexa]

Yes, this property is zoned for for multi. 

[Minna Reid]

203K is pretty flexible. I would imagine if the house is zoned for a multi and the renovations allow it to become a functional multi-you should be OK but the best person to ask about this would be the lender writing your loan. Are you in the process of purchasing the property?

[Eliza Alexa]

Thank you for your knowledge pointing me in the right direction.   I have an accepted offer site unseen (huge feat considering the market preference of CASH & CONVENTIONAL).  Upon viewing  it I discovered it is not a true duplex.  Top & Bottom rented  $2,400/month Total. 

[Minna Reid]

I’m surprised you got a 203K loan offer accepted in this market. Nice work! Sounds like it should work out fine - Good luck!

[Vandana R.]

@Minna Reid hi i saw your post about getting approval for 203k and how it’s rare. Is this just the area you’re in as I’m in Seattle and would have to take out a much bigger loan. Also newbie here interested in multi family.

[Minna Reid]

@Vandana R. Its not normally rare, just rare in this market. Cash and conventional are taking it all lately, with government loans running behind (in terms of desirability to the seller). Because of the current extremely limited inventory, there are bidding wars on almost every home, and sellers are able to be very picky right now. This is in most markets right now from what I see.

[Matt Devincenzo]

I was a seller in a 203K transaction, and the reason no one wants to accept those offers is they are a huge pain. The problem is it isn't the buyer and seller coming to terms anymore, it is the buyer, the seller, the lender and the contractor all involved. On mine there were some budget issues as far as what was included on the loan because the lender had certain required items. Part of the issue is the buyer can't perform the work, the contractor has to include it in their costs. And the lender had 'safety' related repairs which were not safety issues. For example no handrails on the front porch which was less than 30" high. The handrails were actually required to be removed because they home was in a historic district and they were not originally included on the home, that took nearly 2 weeks to resolve with back and forth emails/calls. Things like that made for a many times I thought the deal was dead because the loan was so much trouble. 

Personally, I'd probably never do it again and I'd suggest no one accept the 203K unless they are ok with a 70-30 chance that it falls through.