Thanks for the comment. Unfortunately, I don’t really have a good answer to your question.

1. You did not mention how much $$ you have, but I assume because you are working on an FHA loan it is not enough to buy the $100k property cash. You could look at Hard Money, but you typically need 20% of total costs.

None of the rehabs we buy come close to meeting FHA guidelines, so to get an FHA loan on a rehab is near impossible.

So you can go Hard Money, I’ve made some other posts on how that works.

2. Re: your personal residence. The market here in SoCal is going to drop very hard in November (my opinion only). California just finished their moratoriums so there is almost nothing on the market right now, this will correct itself, but not for a while. So I wouldn’t buy a personal residence until this winter.

If you can flip something in between it might be worth it, but you’re going to end up holding it at least 5 mos, if you sell it to an FHA buyer.

So to answer your final question, if I was looking for a personal residence, I would wait until this winter and buy a nice house at a discount. I would be cautious mixing investments with your personal residence. One is a business, one isn’t.

Good luck!

We have been approved for FHA financing, but we continue to get squashed by competitors with cash or conventional loan approvals in mediocre areas. One house was listed at $202,950 and needed a little work. 24 offers (Yikes!) We submitted our offer at $252,500 and still got rejected.

I suggested to my real estate agent that we should flip a property in a less than desirable area that meets FHA guidelines for under $100K. After a $20-30K rehab job, we would do a 1031 exchange on the gain into a property in an area where we keep getting outbidded. She mentioned the Hard Money thing, but I don’t fully understand how it works. She also sprung the 90-day rule on us, which does not allow the free market to be free, duh.

I’d be willing to flip a property or two or three to build up enough cash to put us in a position to put a substantial downpayment on a home we want to actually live in. If we succeed, we might consider doing a few flips a year on the side.

Steve, how would you approach it if all you had was a $300,000 FHA pre-approval letter in the Bay Area and just wanted to buy a house in a safe area?