Buying my first property using an FHA 203k

[Chris Evich]

Investment Info:

Single-family residence fix & flip investment in Deer Park.

Purchase price: $119,000
Cash invested: $10,000

I bought my first home as a live in flipper. I did this using the FHA 203k loan in an unconventional way. I created instant equity, about $60k. This opened several doors into my big future as a real estate investor.

What made you interested in investing in this type of deal?

My whole family is diversely in real estate. Whether it’s as a broker, contractor, investor, etc.... I’ve been around real estate my whole life and this house was my first opportunity to invest. When I saw a property that looked to have been vacant for some time and needed some work I thought, this could be a good opportunity to have a low monthly payment, a place to live, and a chance to make some money.

How did you find this deal and how did you negotiate it?

I found this deal by accessing the MLS through my agent. Then when I realized the only way to finance this property was by using a 203k loan, I started doing some research. This style loan really detoured other buyers, but seemed very simple to me. So I found a bank, which I wouldn't use again, and got pre-qualified. This house was being sold in somewhat of an auction style through HUD. I ended up being the only offer, which they accepted.

How did you finance this deal?

FHA 203K streamline

How did you add value to the deal?

I brought knowledge of these loans and a fair amount of research about the market in my area.

What was the outcome?

Approximately $60k of instant equity.

Lessons learned? Challenges?

Be very critical of the banks you borrow from and don’t be afraid to shop around. I also learned that it isn’t impossible to make money buying a property in a sellers market. My biggest challenge was probably moving into a friend’s house and dealing with several unforeseen problems and delaying our close date.