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.
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