Purchasing a multi-unit property comes with its challenges.  Finding one is only the beginning, from there, it’s about making it appealing for your ideal renters. Sometimes that means post-purchase improvements, and conventional loans don’t provide the capital needed to make renovations.  This doesn’t have to keep you from investing.  Read how one woman used a 203K Rehabilitation Loan to purchase a multi-family unit that she and her family could live in and make extra money to offset the cost of the mortgage. 

Nicole is a single mom with a great job.  She works hard, and she’s been saving her money to buy a house.  Not just any house, a multi-family property, so that she can offset the cost of the mortgage.  She wants a home for her family and as an investment.

After finding the right property, Nicole met with a loan officer.  He took her through some options, and she applied for an FHA loan.  She qualified for the loan.  But then she hit a snag.  While the property was livable, it wasn’t going to be top choice for any of her future renters.  Worse yet, while Nicole was qualified for the mortgage, she wasn’t going to have the reserves to cover the cost of the improvements she would need to bring in her ideal renters.

Nicole was worried.  She didn’t think she should purchase the property without being able to make the improvements.  She knew that if she wasn’t able to rent out the units she would be on the hook for the whole mortgage, which was a big risk with two kids.  She wanted to look at other properties, but the one she’d found was in the same neighborhood as her apartment, which meant that her kids would still go to the same school. 

Nicole went back to her loan officer who had a solution: an FHA 203K Rehabilitation Loan.  This loan would not only allow her to purchase the property but would provide the funds to do some renovations as well.  He explained that there were a couple extra steps to the process, but nothing to be worried about. 

Nicole decided to think about it for a day or two.  It sounded great, but she wanted to make sure it was the right thing for her family. 

After talking to some friends who had investment properties, Nicole decided to go for it.  She talked to her loan officer who gave her a run-down of the process.  First, he would put in an application for her using the information she had already given him.  From there, she was introduced to a recommended contractor that had experience dealing with FHA 203k loans.  She was able to discuss her ideal improvements and get feedback from a professional that was able to communicate where she would see the most benefit.  After, there would be an appraisal which ensured the proposed improvements would be substantiated by a greater market value.  Finally, she would close on the loan and her contractor would be off to the races, completing the improvements. 

Nicole was ready to get started.  Her loan officer worked with her through the process, including the renovations to make sure she continued to meet all the requirements of the loan. 

Now Nicole has a beautifully renovated 4-unit building that is easy to rent out because of all of the updates.  And, because she was able to take care of systems like the HVAC and hot water heater through her 203K loan, she doesn’t have to worry about repairs for a while, giving her a chance to pay her mortgage and build a reserve for the future. 

If you’re a real estate investor — or want to be one — let’s talk about your opportunities and options.  We’re just a phone call away.