Salvatore Vuono Picture Credit
If you are an investor and have been buying homes cash and using your own money to fix up homes and resell them, you know that if you have multiple projects going at one time, that this can be trying.
What if you could use someone else’s money to do this? Would it reduce your risk exposure?
Yes it would. You may not have full control over the funds, but it can make sense for the many investors.
The 203k loan at one time allowed for investors. But due to fraud and a lack of oversight by HUD in general, the investor option was taken away and we are now left with the 203k Standard and the 203k Streamline for owner occupants.
However, there is a chance in the future that this may change. A key group of 203k Consultants went head to head with HUD late last year to present ideas on how to further update the 203k loan programs that would modernize things as well as fix some glaring problems.
One of the ideas of modernizing the 203k loan, was to once again allow investors to use the product.
Other ideas such as allowing for greater repair amounts for pools, more streamlined contractor approval rules, and possibly cutting back the 203k Streamline loan amount from $35,000 to $15,000. There were many other ideas discussed and we should know by March of 2011 if any or all the ideas are approved by HUD. We have to remember we are dealing with the government here so maybe it may be mid summer.
What other rules were attached to the investor 203k loan option? We won’t know until HUD roles out the updated 203k loan guidelines. But hopefully the government recognizes the fact that investors can help fix up some homes that aren’t in lending condition due to health and safety conditions or other damage.
It would help move housing inventory and improve neighborhoods.
It could be a win-win for all involved. So stay tuned and you want to find out if HUD has approved the 203k loans for investors, subscribe to my RSS Feed, and when I find out, I’ll post it and it’ll go straight to your inbox.
If you have a question in regards to this article please let me know by clicking here.
Best,
KW
17 Comments
This loan type is beneficial to home buyers because of the perks that the loan offers with repair money. Will this change for investors affect the 203K loans for consumers?
There haven’t been any changes as of yet, it’s up to HUD if investors will be allowed to use the 203k loan. If the changes are made for the investor it’ll mean more competition for the non-investor consumer on getting a fixer home.
This kind of loan is very helpful to home buyers due to the perks that the loan offers with repair money. Will this vary for investors change the 203K loans for consumers? Do you think so?
I hope it doesn’t change anything for the consumer. It’s all speculation at this point, we’ll just have to wait and see if anything happens with HUD and it they decide to bring back the investor 203k or not among other things.
I haven’t been keeping up on this. Have the loan amounts decreased?
Has there been a verdict on this? Seems like the only person at stake would be the non-investor.
No verdict yet, we’re still waiting on HUD to respond.
Not yet. The loan amounts have remained the sme for now.
Ahh bummer… definitely staying informed to see what happens.
Thanks
Yet, there were not any changes; it’s all up to HUD if investors will be certified to use the 203k loan. If the changes are prepared for the investor it’ll signify more competition for the non-investor consumer in order to get fixer home.
How can I get involved I have been a 203(k) consultant for b16 years
This is great. It’s all speculation at this point, we’ll just have to wait and see if anything happens with HUD and it they decide to bring back the investor 203k or not among other things. Thank you for the information.
I would join LinkedIn (it’s free) and join some groups. There are a few really good 203k groups with seasoned HUD Consultants that share their knowledge.
Kevin – still no word on whether or not the Investor 203k option is back? Seems like there’s a lot of interest here, I hope they do re-instate it, and soon!
~Kayla
Kayla, still no word.
ill this vary for investors change the 203K loans for consumers? Do you think so?
Karyn, you can bet that investors will put their own overlays (additional rules) on the investor 203k loan if it comes to fruition. We still don’t know yet if it’s making a comeback.