The FHA has a fabulous 203k rehab and renovation loan program that funds necessary improvements and updates to homes in need of repair.
There’s a question we’re often asked by our Home Buyer Workshop attendees and first time buyer audience. Can I buy a multi-unit property and live in one while I rent out the other unit(s) for income? The answer is ‘Yes, you can!'”
FHA 203k rehab and renovation loan program makes this process simple and within reach for many ‘traditional home buyers. All it takes is a for-sale property that needs a certain level of repairs, updates or modernization. The FHA will help you purchase & renovate for just a 4% Down Payment, if you and the property meet certain conditions.
Here’s a simplified example:
- There is a $415,000 4 unit DC property listed for sale that is in need of repair;
- The $415,000 property needs $180,000 – $200,000 worth of renovations & updates
- It’s determined that the property will be worth $600,000 – $615,000 after the proposed updates, the FHA 203k loan will let you purchase for just a 4% Down Payment;
- Renting the units at a reasonable DC rental rate ($1,200/mo. or more) nets you $3,600+ per month in rental income that pays your mortgage (and more).
In this case, you live in 1 unit and you rent the other 3 units in the property for income. DC rents increase an average of 3% per year on their own…your long-term income grows with the area rents while your fixed rate mortgage stays the same! Current interest rate levels for these loans are under or around 4% currently.
Besides rents increasing 3+% per year, you have the overall value of the building for potential appreciation. These fixer-uppers often fall into ’emerging neighborhoods’ that have not seen full positive price appreciation yet. Time is on your side when your mortgage is paid for by your long-term tenants!
There’s a ton of small multi-family properties (2 to 4 unit) in the DC Metro area that are prime targets for the smart use of these mortgages! RSVP if you’d like to attend – it’s free! Our Free multi-family property search is available at http://bit.ly/2eJjoxx.
We are real estate agents who teach! UrbanLand Company Home Buyer Workshops have helped DC/MD/VA buyers purchase 1,450 in properties since 2014 using different types of financing programs that are available locally.