Need To Rehad A Home You Are Purchasing?

This is just a brief message to remind you of the benefits of the 203(k) loan that’s available through FHA.  Sorry real estate investors, it’s not for you.  But if you are someone who is in the market to purchase a home but the home is going to need a lot of repairs and you are strapped for cash you may seriously want to consider a 203(k) loan.

Over the past year I’ve helped several people purchase homes using this program.  There are some pretty heaving fees for using the 203(k) loan and a lot of hoops to jump through.  But if you find a home for sale in the Kansas City area that would allow you to pay the fees, jump through the hoops and still  be sitting on a very nice, large nest egg of equity when you were through would it be worth checking out?

5 Comments

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5 responses to “Need To Rehad A Home You Are Purchasing?

  1. Andy

    It seems that it may be the only way to buy a rehabber unless you sold out of CA years ago and just sat on that wad of cash.

    I’d say that the biggest hoop so far in our 203K wonderland experience seems to be the lead-based paint. If you’re within a few hours’ drive of KC and have to deal with Pyramid or their merry band of phone tag subs, you’ll be in for a wild ride…..but that’s after you pay for the LBP abatement work. If the FHA flags your home for abatement beware of the numbers. Our home should have cost around $6k to abate/paint, but our paint contractors didn’t know that a gallon of encapsulant paint would only cover 100sf (instead of 400sf with regular paint). If it looks like you’re only going to get $xxxx.xx amount for LBP abatement, ask to have it doubled or get estimates before the deal is done.

  2. Great input, Andy. That’s information I did not know. I knew you had the LBP situation but not the much higher cost.

  3. Andy

    ..and it just got $500 higher. It seems that when you have an initial LBP test done, they test with wipes and an XRF machine. When they come back after the work is done, they only use the wipes. What we didn’t realize is that the people who owned the home before it was foreclosed on sanded the crap out of one of the window sills upstairs and blew lead dust EVERYWHERE. Now the floor tests positive for 95 micrograms/sf and we failed the LBP clearance test. So, we now have $3500 in paint that we can’t be reimbursed for because we didn’t pass the clearance test and have to clean the $*** out of the floor with a HEPA vacuum, get some test kits from HD and check our work, and pay Tidewater $500 to have an inspector come back up here from Wichita to retest. Hoops…yeah, there are a few.

  4. Andy

    Update: It turns out that we aren’t out another $500. After some tense words on the phone with a representative of Tidewater a few weeks ago, I realized that I’d just been given a good education that would only turn out to cost me $75.

    Tiffany L. at Tidewater (lead inspection) turned out to not be a PITA as I first figured, but a true asset in getting us through all of this testing stuff. She took the time to not only deal with my hard-headedness, but to detail what needed to happen.

    Here’s a link to the lead cleanup pdf that we used to clean the house. http://www.hud.gov/offices/lead/lbp/hudguidelines/Ch14.pdf

    HUD pays for an “inspection” on the houses that it disposes of for the FHA. This is different than a “risk assessment” in that the “inspection” only requires visual and XRF testing prior to abatement , but testing for dust (using wipes) after work/abatement.

    Now, our house had been rehabbed a bit (by some knuckleheads, of course) and probably should have had a “risk assessment” done, but it’s more costly and da’ gubment isn’t going to spring for that. A “risk assessment” involves visual, XRF, dust wipes, and soil samples from outside.

    We failed because we went by the info from the XRF testing report and _that_doesn’t_work. If the XRF report says “Negative” it only means that whatever coating is on the floor/wall/area does not contain lead in its makeup. There could be lead dust on the floor, walls, and sills, but you’d still get a “Negative” on your report of what the XRF machine showed. Clear? Thought so… You’d think that it would pick up dust, but it only does coatings/substrates.

    Now, I’d guess that it’s safe to assume that if there’s any evidence or even the possibility that someone sanded/scraped an area that came back as “Positive” on the XRF inspection report, that abatement like what’s in the pdf document above needs to happen for a large area surrounding the scraped portions.

    Our upstairs is pine plank, so we cleaned it with the 3-bucket TSP method, then painted it with lead barrier compound, and then painted two coats of porch enamel on top of that. We should pass now. If we had wanted to get around doing this, we could have put down tile board or cheap plywood and when it was swiped it would have come back clean, but we wanted to limit adding to the floor height and to get rid of the dust since our child will be in the area.

    It’s been an education, but every day as our kid goes blasting out the door to happily play in the yard, or race her tricycle down the sidewalk, we appreciate all of the foot and paperwork that Chris did to get us into this old house.

  5. I love a good story like that. Truly. Congrats.

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