If you’re a person who wants to get the house you want for the price you can afford—without getting into a bidding war for that move-in ready one—you might want to consider a rehab loan. Known in the industry as a 203K, this is a great option for getting a nearly custom home for a steal.

I recently worked with a young couple to buy their dream home, sort of. In that, I mean, it their dream home. But when they bought it, it wasn’t even close. Here’s how it worked:

1. We found a house with good bones in a great location that just happened to be owned by HUD (Housing and Urban Development). We purchased the property at a good price, based on its condition. My clients had a fantastic vision for what this little rambler could be.
2. That’s when the leg work started. We gathered bids for all the desired—and, in some instances, required—improvements.
3. They applied for a loan for the purchase price plus the estimated repair budget, added on a little extra for anticipated cost overruns, and submitted the whole package to the bank for approval.
4. When the approval was granted, the great news was that the final subject appraised value was going to instantly give my clients a boost of 10% equity once all the improvements were completed.

These were the kinds of repairs they made for this project:

• new roof
• new kitchen
• new flooring throughout the house
• removal of popcorn ceilings
• paint throughout
• new millwork
• upgrading insulation in crawlspace

Essentially, they will have a move-in ready, custom home, purchased for well within their budget, and with instant equity. What’s not to love about that? Although a 203K might not be for everyone, it’s a great way to end up with the house you want, for the price you want, if you’re willing to invest a little extra time and effort.

DOUG LAWRENCE is a licensed real estate broker with Keller Williams West Sound in Gig Harbor, Washington. If you are looking to buy, sell, or invest in real estate (203K’s or otherwise) in the Pierce or Kitsap County areas in Washington State, he’d be happy to lend a hand! You can find him at www.douglawrencerealestate.com.