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Updated over 6 years ago,
New to BP. An intro and a question.
Hi everyone. I'm Lou and I'm new on BP. I live in Staten Island NY which is actually the forgotten 5th borough of NYC. I grew up in the flooring business and now have taken the helm since my dad's retirement. I've also done some general contracting and fully renovated my first home myself. I've been working in multifamily buildings since I was about 18 with the flooring business, and I was always fascinated at the thought of owning one. I bought my first two family home 13 years ago. My ex wife and my 10 year old son and 9 year old daughter now live there, and I'm nearby in an apartment. As of recent, I've come to accept that my son, who has extensive special needs, will be far better off in life if I can have a business set up for him that will generate passive income. So this has been the impetus behind my recent determination to finally get started at 40 years old.
I had planned on buying myself a home early next year, but then decided multifamily was a better option for me. Since yesterday's seminar here on BP, I've read about FHA 203k loans and figured this might be the way to use what I'm good at (renovation), and to get three things I really want (a home, rental income, and a start in multifamily investing). I'm usually a very decisive man, and this is why I'm able to run my flooring business so effectively. However, I'm here now as the guy with no experience and so I have a question. Is it possible to use a 203k loan to buy and renovate a 3-4 unit, live in one unit, and refinance out the money I put in (assuming the numbers allow for it)? I figure I can build more equity than others who aren't in the business of home renovation. I'd like to be able to pull the money out so that I can reinvest in another multifamily ASAP if I go this route. To me it seems like the right move, but I figured I'd check in for some friendly advice. Thanks,
@Louis A Buono Jr Welcome to BP! Congrats on deciding to take an action! It is possible to use 203K loan for renovations. You should reach out to several local loan officers in SI and ask for their feedback. Or even better, start attending local REI clubs found via meetup site and get recommendations from other investors on investor-friendly banks in the area.
Best of luck!
@Alina Trigub thanks so much for that warm welcome and great advice. I will do exactly that!
@Louis A Buono Jr Congrats on getting started. I started at 40 and retired from my day job at 50. There is a lot to learn buy being business minded and having some experience in the trades per se' I think you are in a good position.
@Glenn McCrorey thank you. I appreciate that and I hope to one day tell your same story.
You may want to talk to a mortgage broker about the 203k loan. My knowledge on it is very limited, but I believe you need to have a 203k qualified contractor complete repairs. If you were thinking you could act as a GC yourself, you may be mistaken.
However, there are other options for financing that would let you accomplish your goal. Check out the latest podcast for some ideas on private financing.
Thanks @Mark Gauger I appreciate your input
I believe @Mark Gauger is correct I didn't use a FHA loan for two reasons I wasn't going to be living in the property and they wouldn't let us do the work ourselves. I ended up doing a commercial loan but it is still the BRRR strategy after the loan seasons I should be able to pull out my initial investment and have money (and more experience) to work on another deal. if you have money for a down payment a commercial loan may be better or if you can find out what it takes to be a GC there might be a way to work within the system. I didn't think Illinois had very strict laws about qualifications but I'm not really sure.
Good Luck
Thanks John I appreciate hearing from someone who explored this same route, and I will definitely look more into the BRRR strategy. At first glance, it appears to be exactly what I'm looking to do. Thanks so much @John Leake
Louis, look into State and Federal programs-grants that may help with funding for special need families. Supportive Housing Grants, Housing Choice Vouchers, Shared & Sheltered housing program, Home Modification Grant, HUD Vouchers.
Here are a few places to start. Alliance of Genetic Support Groups, Academy of Special Needs Planners, Special Needs Alliance
Ton of resources for special needs
https://www.especialneeds.com/fundingDifferent states have different programs. I am not familiar with NY. Also there are programs for Veterans, single mothers that need single occupant room rental.
Hope this helps!
- Joshua Eudy
@Joshua Eudy that's some really helpful info. Thank you for taking the time to list these resources... very much appreciated!
Anytime! Glad I could help! Let me know if you have any other questions, shoot me a message. If you know anyone looking in NC have them reach out!
- Joshua Eudy