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Multiple offers are coming in
over the asking price on regular or short sales. This market makes it tough for
first-time buyers to compete in multiple offer situations when they come in
with 3.5% or maybe 10% down. It’s difficult to get offers accepted. Because the
market is the way it is, my clients are looking at properties that are not
habitable. The competition for these types of homes is the cash investor who is
going to pay rock bottom prices because this buyer will have to rehabilitate
and resell it, which will involve selling and holding costs. Whereas my client
who is looking to occupy the property will not have the selling and closing
costs so they can pay more.
So what can you do if you
don’t have the cash for repairs? 203K financing is a great program much like a
regular FHA loan with a fixed interest rate for 30 years. With this program,
though, you’re able to finance all your repair money. For instance, if you want
to buy a property for $200,000, put $100,000 into it for repairs and increase the
resale value to approximately $325,000 you’ve got a deal.
Some think these loans take
70 to 90 days. Admittedly, the first one took me 85 days to do because of the
learning process, but since then we’ve closed these loans in 45, 42 and even 38
days. Having the right contractor and consultant for a 203K loan is the key.
The client needs to put together a wish list, have the consultant review it and
then work with the contractor to make sure the budget balances out. At this point, the appraisal is done and it
closes like an FHA loan. We recently closed a home with a 203K loan for
$274,000 and $130,000 financed in rehab money. The project, which will be
complete in four months, will result in a beautiful home.
If you have any questions,
please call us at (626) 712-3052 or email us at ssharma@ephmc.com.
