Spreading our wings... first property... 203K Rehab Loan!! Yikes!

[Joshua Shepherd]

I have been holding off discussing this because the process we are going through on our home closing has been crazy. I am in the General Contracting Business as a Project Manager and naturally wanted to take on a renovation project on our first property. My wife and I have just gotten our clear to close on our first FHA with a 203K rehab loan attached. We have been working for a couple months to build and establish relationships with people near us to take on this renovation of our new home as well as gathering all the necessary information. It was a daunting process with lots of paperwork...

BUT, the good news is the loan has been cleared to close as of yesterday. We are signing on the 6th and we are very excited. We looked at several properties, some single families and some duplex/triplex and found most places were absolute dumps and required $60 - $80,000 investment to really get them livable. As a first property we wanted to stay away from that type of project. 

We found a great duplex and put in for the FHA loan with the 203K Rehab loan to invest a small amount to upgrade some things in the "owner's unit" where we will be staying.

Home location: Farmingdale

Price of the Duplex: $66,900

203K loan amount: $27,000

Total investment: $93,900

Unit rental $: 750 per unit/tenant pays electric and hot water is on electric. 

We were looking for the best place we could find with more cosmetic issues while cutting our living costs to a minimal amount with the ability to have a tenant pay the mortgage. Hopefully this will allow us to re-invest soon as we look forward to adding many more properties to this one and continue to refine our process. Who knows maybe the next one will be a flip?? This is kind of a test run with our GC we have chosen to do the work and the subcontractors and see how our relationships develop. 

We will be moving into one unit and renovating the other. We will do some touch up work on the unit we stay in for a bit and then transition over. We are shooting for a 4 week renovation and look forward to being settled finally in our new place. We may even have a solid tenant lined up already for when the renovation is completed. 

Just wanted to share a little of this story and adventure we are on in little old central Maine so others can chime with their unique projects and challenges they are facing. Always looking for like minded individuals who share a passion for this. Have a great 4th of July weekend all!