Financing without kitchen/baths

[Joshua Lester]

Thank you in advance to all the biggerpockets members.  I've been lurking here for years and have learned a lot. 

Looks like I will be under contract this week on a property and having a bit of trouble understanding what direction I should go in for financing.  The property is a distress sell (ugly divorce) that I was able to grab before it went on the market.  The couple recently "gutted" the house in preparation for a full interior renovation.  This property is a deep water home overlooking a marina and  may become our primary residence.

All renovations are cosmetic and I intend to do most work myself.  I'm an engineer with construction and project management experience and have renovated my own home and a flip.  I have the funds for a healthy down payment and renovation costs, but know it will be a challenge to finance the purchase without a working kitchen or bathrooms.

So my question: Is there a conventional way to finance this without renovation costs included, can I use a Fannie HomeStyle or FHA 203K without using they're funds (or very little) towards the renovations? Is there some combination I'm not aware of? Seems like I could finance the purchase and ~$10k of the renovations (to be done by a contractor) and do the rest of the renovation myself and out of my own pocket. Not sure how to handle this with the lender as they don't seem to understand my needs. Should I just be looking at HML to get this done quickly and refinance?

The numbers on this should be the easy part.  My credit and income make this deal easy.  After renovation the property should be worth $150k more than purchase+renovation.  I'll end up with 60+% equity at the end of the day.  The basic problem here is financing without a kitchen.

Thank you for any advice you can give.  I have searched and found little to explain how the 203k inspection, valuation, loan value, etc. work and if there is a way to borrow far less than the renovation is going to cost.

[Daniel Dietz]

Have you checked with small local banks to you?

My daughter just bought a short sale home that did not have a conforming septic system so could not get a 'conventional loan'. She is also finishing the basement that is just bare right now. She went to our local independent bank that we have both used for years. They were more than happy to give her an 'in house ARM' based on the AFTER renovation value that she will refinance in the spring when the septic does in and the basement is finished.

The numbers on her's were similar in that the ARV will be about 185K - 195K, her purchase was about 122K and fix up cost of about 25K doing most work herself. She DID need to get a quote from a local contractor in case she was not able to get it done herself.

Good Luck, Dan Dietz