All Forum Posts by: Sam L.

I have a done a 203(k) on a duplex, so can answer questions you might have.

Being in CA, all my numbers are over 10x yours though ;)

The two main types of 203(k) are streamline or regular. Streamline is <$35k improvements, and is much simpler.  If labor in your area is cheap enough that you can make your improvements within that budget, then it may be a good deal.

However, I would not recommend a regular 203(k). 

To start with, there are 4 parties involved in 203(k) work: You, The Lender, Your Contractor, and the 203(k) Consultant.  It starts with you & your lender figuring out how much you can afford, then you find a contractor and get him to draw up a statement of work for a fixed price. Many contractors will not be willing to cooperate with this process. Those that do, will charge a premium since they have to cover themselves on a fixed price bid.  Assuming you can find a contractor willing to work with the process, and who can bid the work within your budget, you then find a 203(k) consultant who makes sure A) the work is done properly, and B) adds on any "health and safety" issues. This can add significantly to your costs, as this is likely work you wouldn't otherwise be doing, but must do to get the FHA approval. This will somewhat depend on your consultant and how much of a stickler he is (mine appeared cool, then turned into a hard-*** halfway through the project).

Oh, and before any of this starts, you need to find a seller willing to go with the longer close (60-90 days), since the statement of work needs to be finalized _before_ closing.  My area is hot enough that conventional financing loses out to cash offers frequently, so there's no hope of finding a seller to put up with the 203(k) hassle.

I should really write this up into a longer article "10 reasons why the 203(k) is not as good a deal as it sounds". Any interest in that?