All Forum Posts by: Michael Dunn

Thank you Robert

That's what I plan on doing

I appreciate your input

Thank you for the information Wayne

Come Monday, I will for sure mention it to them

It didn't seem correct to me either , that they would cap it at $10,000

once repaired, this property should appraise via it's ARV .... around the $85,000 mark

This coming Monday is going to be a big day for me , as far as getting close to a " For Certain " on the property I have been pursuing for some time now

There are a few things that I wanted to ask BP members , and get there feedback on , to kinda prepare myself for what may come from the Property

Here are my main questions/concerns:

1. I'm going to go with an FHA loan, and do away with going with a 203K . The seller and myself have both agreed to sell the house " As Is " . The property is distressed and does need some extensive repairs ( roof, flooring, paint, appliances, etc. )

I was told that by avoiding adding on the 203K to the loan, that I can 1. Do the work myself ( since I will now own it , in it's " As Is " condition )   2. That the buyer and seller can come up with a mutual agreement on how much time to give me ( the buyer ) to have certain repairs completed.... say 3 - 4 months from the day we close ?

2. Will the Lender give me a loan on a property that is distressed and is in need of repairs, even if those repairs are going to be done by the buyer , and also that they are completed within a reasonable time frame ?

3.  The roof on this property will need a roof within a year.

But since I am not going to use the 203K loan .... is there a way that I can get an additional $5,000 - $10,000 from the Lender , solely for certain repairs . Like a 2nd mortgage ? Or in an Escrow?

I'm just wondering if they would do this, since I'm the one who will be doing nearly all of the repair work ( I have 12 years experience in the contracting business ).  So maybe this will help me in getting an amount that exceeds what the house appraises for  ........ Purchase price for the property as it sits = $57,000  +  $10,000 for repairs = a Loan of $67,000

But, this assumes that the house only appraises for $57,000

I know that for a house between $50,000 -  $80,000 ,  can only get a Max of $10,000 for repairs added to the loan using a 203K.   But that with a 203k , you HAVE TO have all of the repairs completed by a Licensed Contractor..... and this is what I'm trying to get around, by being able to do the work myself .

Even if I did the 203K , the repairs that will Likely be required by the Lender to be completed will be $5,000 - $10,000 over this amount. Of which I'd have to pay the difference out of my own pocket, of which I Don't have

Thank you for the help. I'm a bit confused on how my situation will likely play out , and am trying to educate myself on the subject before Monday gets here  :)

Thanks - Michael

I received an e-mail from a Lender I have been talking with, and was told the following ......

" To determine the maximum improvements amount you will use 20% of the sales price.

Example: If you sales price is $50,000, the maximum improvements would be $10,000.

This applies to sales prices between $50,000 and $79,999.

Sales price of $80,000 and above will remain as is which is $35,000. "

So from what I gather , if I purchase this house for around $57,000

and it needs around $20,000 or so in repairs ( may could get by with $15,000 ) , then they are only going to loan me up to a Max of $10,000 towards the repairs , and then I would have to come up with the rest , out of my own pocket ?

I haven't had an appraiser come out yet and give a list of the repairs that they are going to " Deem necessary/mandatory " to be done , and thus the Lender will require be done as well.... but I'm pretty sure that the roof will be one of the Mandatory things that they will require be done ...... ( about $6,000 ).  The outside of the house has Lead paint and needs repainted ( about $5,000 - $6,000 ).

Needs new flooring in the house ( $1,200 ).  Needs Appliances ( stove and fridge ... $600 for both if used ).  Needs a Water heater ( $500 ). 

So already , I'm nearing the $15,000 mark, but they will cap me at $10,000

And given that the formentioned things are likely going to be mandatory fixes ..... Will they even give me the Loan period ? As this is my main concern

Thanks for any and all input and any recommendations on a way to get more money for these repairs ..... maybe a " Side Loan " like a 2nd mortgage ?

Thanks much

Thank you all for your replies

Derreck Wells,

I was wondering if you could please shed some light , on what I may face with this Lead paint issue , as I will be using a FHA 203K rehab loan.

The property needs around $25,000 worth of work done to it  ( New rook, new flooring, new AC unit, appliances, inside and outside painted, some electrical work )

I can't exceed this amount of $25,000 that is allocated to the repairs , as I am working with a limited budget on what I have gotten approved for via a Loan, and that is $80,000 .

The purchase of the house will be right around $52,000 and then adding on for any closing costs / pre-paids that I may have to come up with .... $25,000 is my Max amount for the repairs

I just don't want to jump the gun on getting an Inspector out there to inspect the property , as well as an appraiser .... only to find out that the Lead paint is going to be an issue , and end up costing me an extra $5,000 to have the whole house scraped and the lead paint removed , via some FHA rule ?

Thanks again for everyone's help, I really appreciate it

If I was willing to scrape it and paint it myself ...... would they allow this ?

or does it HAVE TO be done by a contractor ?

And lastly please , what if I went with a Conventional Loan ( the 5% down ) instead of the FHA 203k , could I then get around the Lead Paint issue ?

Thanks for the help

I just went over to  a house I have been considering buying over the past few months , and did a Lead Paint test on various spots on the exterior of the house...... and sure enough, it tested positive for Lead paint.

My question/concern is ..... what will be required to get the house appraised and or Inspected and approved for an FHA 203K loan ?

This house was built in the late 40's to early 50's , so I knew going into it , that Lead paint was a possibility

What are the costs associated with getting a Lead paint approval, as well as in having ( just some of the house scraped ) and then having the whole house painted ?

The only part that needs scraped , is the under part of the ceiling and some of the walls on the Porch area . Other than that , there's not much scraping that needs done, anywhere else on the house... it will just need painted .

Just needing to know how much I am looking at cost wise , as I will now have to add this to the repairs for the property.

The sqft. of the house is about 1800 sqft. and it is all 1 story

Thanks so much - Michael

I was wondering if it would hurt my credit, if I were to apply for a loan with 4 different Lenders , to see which will give me the best rate, and more particularly for me ..... Loan me the most amount

I have been approved for a $65,000 loan from one Lender , but wanted to apply  for a Loan with 3 other Lenders, and see if I can get a higher amount ...... $75,000 - $80,000 preferably .

I just don't want this to hurt my credit , by submitting / applying for 4 different Loans ?

Should be ok , as long as I do them all with  a 1 month time .... I should be fine ( as far as it not hurting my credit and or bringing my Credit Score down )

Thanks so much as always - Michael

hi Stephen Akindona,

Thank you for your reply

The properties in the formentioned areas that you mentioned ...... are the rents in those areas reasonable ?  In the $800 - $900 range ?

And I have looked some into the Berclair area , what about the areas in  38117 ..... near whitestation, Mt. Moriah and Park / Poplar ...... have you seen many properties for sale within the last year in the sub $60,000 - $65,000 range ?

Thank you again  for taking the time to reply, I appreciate it - Michael

The $45,000 - $70,000 price range ?

I am wondering if someone can please shed some light, if there are any good ( safe / low crime ) areas in the Memphis,Tn and surrounding area  ( Desoto County included ) , that has houses for sale in the $45,000  -  $70,000 price range ?

I finally got a 100% iron clad response back from my lender m and I qualify for a MAX loan , of $65,000

I live within the Desoto County and Memphis area , and know that I know how much house I qualify for , I am wondering if there's anywhere in my area, that has houses in my price range ..... that are safe neighborhoods and that have a history of LOW crime rate ?

I was looking into the  38117 , 38122, 38111 areas for Memphis

As for Desoto County ..... it seems that it is going to be hard to find a property for this price range , Unless .... I can get a house that they're asking $75,000 for , and will come down off the price $10,000 ..... for a purchase price of $65,000

Thank you to anyone who can help me with the forementioned question(s)

I'm qualified , approved and now have a for sure MAX that I can borrow for a house .... now it just comes down to where to look

Thanks so much - Michael