Preparing for a 203k loan

[Aziz Bangurah]

After doing some research I've decided to go for a 203k loan to buy my first property. I'm not ready to apply yet, I'm still improving credit score and saving up for down payment. 

The max amount of loan I want to use is 100,000 renovations and purchasing, I choose this amount because I can afford the mortgage, if no one is living in the units. I found a 4 plex 2 bed rooms, 1 bath for 99,000 but Zillow estimated it at 75,000. I notice the owner spent 97,000 in 2011. It looks like it drop in value due to the owner not taking care of it. The 4plex has 3 rooms rented out, the extra is used for storage right now. The tenants are paying 365 a month for rent, that is below average for the area and they pay utilities and a HOA of 81 a month for all 4 units. Mortgage cal estimated 775 a month including taxes, insurance, PMI, HOA.

My plan is to purchase the property or a different property at 65k or 70k use the rest of the money for rehab and live in one of the units.

My questions

1. Does 203k loans work with property that have tenants living in them or will I have to buy a foreclosed  property 

2. How much money should I save for this project ? My biggest fear is not having enough money out of pocket to cover downpayment, closing cost and etc.  My goal is 5,000. Will I need more ?

3. Can I do renovations while tenants live there ?

4.I've notice there are a bunch of 4 plex in the neighbor own by different owners they all look similar . If I fix mine up and raise the rent could that potentially  be a problem ?