Investors! Sell Homes Using the HUD 203K Loan.


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By: Rob Caldwell

“The what?”  This is the reaction when asking real estate investors or potential home owners if they are familiar with HUD’s 203K loan.  If you are a real estate investor that sells the properties you buy, you need to know about the 203K loan to offer your homes for sale to a broader base of buyers.

Most of us assume that if we sell a house to an owner occupant, it has to be completely renovated and should be able to pass an FHA inspection.  The 203K loan is an alternative that can be used to sell a home that needs work to the owner occupant.  The 203K does has some limitations such as structural.  But if the home just needs some TLC such as paint, carpet, kitchen and bath updates, new roof, etc., the 203K loan will work.

For real estate investors, this can be a new source of buyers for their “as-is” homes for sale.  There are many homebuyers looking for homes that need work.  But they typically can’t get funding to buy the home; additional repair money to do the work; and then a permanent mortgage when the work is completed to pay off the construction and repair loans.  The 203K loan does all of this.

The only drawback I have found, because of the unfamiliarity of this loan, is finding a mortgage broker who understands the 203K process.  Because it is a FHA backed loan, many brokers will tell you they can write the loan, but if they do not understand the process they can really screw things up.  There are many horror stories about the 203K loan because the mortgage broker did not know what they were doing.  Just make sure you interview brokers until you find one that specializes in the 203K loan and has had success with it.

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Rob Caldwell is a Development Agent with HomeVestors® of America and is based in Lake Lure, North Carolina. Rob’s role is to recruit, train and support HomeVestors franchise offices in North and South Carolina. Since 2004 Rob has bought more than 100 houses through the “We Buy Ugly Houses®” franchise system. If you are interested in a HomeVestors franchise in the Carolinas, contact Rob today! Rob.Caldwell@homevestors.com or 828-625-5836.

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