Input on 203K Streamline Strategies for Flip

[Eric Dufault]

Good Afternoon BP,

I'm playing with the idea of doing a 203K Streamline Mortgage on a distressed property, inhabiting it for a little while, and then putting it on the market. I'm looking to do a majority of the work with friends who work in the trades in our spare time. For those who aren't familar a 203K Streamline tops out at $35K you can finance, ontop of the initial offer on the property, for rennovations. I live in Massachusetts where real estate is a little more pricey that a lot of the country and am curious if I can realistically expect to turn a profit with only $35K for rehab costs? What should I be looking for in a property other than structural soundness, nice neighborhood,etc. specifically what makes one distressed property more profitable than another?

Thanks for your input and have a good one.

[Chris Gillins]

Eric Dufault not to come off as preachy, but the 203k loans are not designed for investors but for OO. On the other hand it is a good loan structure, but one of your group will have to be a licensed contractor. You will be going through inspection processes with your lender and the FHA is pretty stringent on the appraisals of the work. Doing it on the side may not work. If you're currently renting, maybe look at the standard 203k loan so that you can lump some of the mortgage payments into the loan. But again, this is for OO only and I wouldn't go the shady route as investors have a bad enough rap out there. Maybe look into a HUD house with a homeopath renovation loan? 10% down for investors with rehab costs included?