203(K) or conventional loan

[Patty C.]

If you exercised the option to 

Renovate using a 203(K) loan 

OR

Purchase with a conventional loan, use your own money to renovate, and then refinance the money out after rehabbing

How did it turn out?

What advice do you have for someone new to rehabs?

[Kyle Gregg]

@Tamara Taylor

I did a standard 203k. I went through the house with the contractor to put together a scope of work. I had a HUD inspector also come a walk the house. Together, the contractor and HUD inspector put together a scope of work to submit to the bank. This will be what my rehab is based on. Once i closed on the house, the contractor was required to start work using his own funds up until the first draw ( i was scheduled 4 draws). When the contractor needs money, he contacts the HUD inspector to do a walk through. The HUD inspector puts together a draw request that we all sign and submit to the bank. The bank overnights me a check that i sign over to the contractor. Its a fairly simple process if your contractor knows what hes doing and has done 203k loans in the past.

If your contractor isnt up to the task with the 203k, find someone else. Definitely get SEVERAL contractors to provide you a bid...dont rely on a single number. I used 203kcontractors.com to find my contractor...and he has surpassed all expectations. 

The paperwork isnt too bad if you have a knowledgeable loan officer who can put together the 203k loan. The paperwork for the contractor isnt bad either, if he knows what hes doing....it all boils down to experience. VET YOUR PEOPLE! youre the boss of your project and you need to hire all the right people to get you where you want to go. 

GOOD LUCK!!!