All Forum Posts by: Devin Collins

@Devin Collins

I think the first step is determining if it is a deal that makes sense financially. If not, you'll have a very difficult/impossible time selling it. The reason I'm approaching from this angle is because by saying ARV, it makes it sounds like it needs work; how much renovation is needed? With only an $8K spread between the purchase price and ARV, it seems very thin. What is market rent?

@Devin Collins Although the traditional FHA loan (FHA 203b) has a requirement for the primary borrower to occupy the property within 60 day of closing, The FHA 203k does not have a requirement where the primary borrower is required to physically occupy the property. However, FHA loans, including the 203k, do have a requirement that the primary borrower intends to occupy the property as their primary residence.

Both versions of the 203k, Standard and Limited, allow up to 6 months to complete the rehab and the actual rehab time approved can be less as determined by the 203k Consultant or Certified 203k Contractor or the lender. 

@Jaron Walling Thank you for sharing the link to that article, which is pretty good, but there is some misinformation or confusing information in it, such as:

• The initial step by step did not include the HUD 203k Consultant (only included later on in the article)
• Contractors are not paid by the HUD 203k Consultant - The HUD 203k Consultant, along with the borrower, approve/disapprove the contractor's draw request, which is sent to the lender, who then releases the approved money to pay the contractor (typically a 2 party check sent to the borrower)
• Limited 203k does NOT require the borrower to live in the property during renovations; the Limited 203k requires that the renovations cannot cause the borrower to be displaced from the property for more than 15 days during the rehab, but the borrower can certainly choose to live elsewhere during the rehab
• The Standard 203k does NOT allow the borrower to finance rent or housing payments; the Standard 203k allows the borrower to include up to 6 months of the property's mortgage (PITI) into the loan
• The article says the Standard 203k will not let you live in the property during rehab, but that is not true; the borrower can certainly live in the property during the rehab

Overall, a decent article but felt the need to clarify a few items. (Reference HUD SFR 4000.1)