The question comes up again and again about FHA 203k loans and real estate investors. The short answer is, “no, the FHA 203k loan is not for real estate investors”. For over a decade I have had real estate investors call me saying they had been to a seminar where they were told about FHA 203k loans for real estate investing and I have had to educate many to the reality – not because I’m so great but because I have been an FHA HUD approved lender for many years.
So what about the FHA 203k loan can benefit a real estate investor?
So glad you asked because there is a way to benefit from the FHA 203k loan especially in today’s economy! There are two answers to the question we can quickly cover without making you read all day:
1. Flips – but you must understand the definition of flip by FHA which means ANY property that has been under the EXISTING title for less than 90 days. In other words if the name of the seller went on the title of the property less than 90 days ago it will be considered a flip by FHA. Forget your definition of property flipping because it will only?frustrate?you if you try and convince a lender or loan officer why you’re right and FHA is wrong. HINT: If you buy a property in your name and quit claim it to your company name the FLIP period starts when the title change is made. You may have owned the property for 12 years but if you quit claimed it to your company name 88 days ago it’s still a flip. Yes, we can overcome this if you are a sole proprietor but why go through that extra hassle?
2:. Invest in properties one at a time one year at a time. You can purchase a home using the FHA 203k and live in the property for one year then move to another. You may think this sounds odd but I have a client turned friend who has built some good net worth using this method.
How do you find out more about the FHA 203k loan? You call me of course, on my cell phone at 678-439-8683 anytime.
— Ken Cook NMLS ID 208452