Need a Team for a Renovation Loan in Maine!

[Ken P.]

Hi all, I am aggressively searching for a value-add house hack in Southern Maine, specifically within a 40 minute radius around Portland ( Biddeford, Brunswick, Gorham, Westbrook, etc.). I have determined a renovation loan to be a great option for me but I have now had two different potential opportunities fall through on these loans (FHA 203k or Homestyle) because I did not have my ducks in a row before trying to get the renovation loan in place, and I don't want it to happen again because the last thing I want to do is waste people's time and lose out on potential opportunities.

Specifically, I feel I really need to get a team together that has experience working with renovation loans. I'm already working with a great agent (@Harrison Smith) so I'm covered on that front, but I would be unbelievably grateful if anyone who has done one of these loans in Maine could point me toward a lender, a HUD consultant (203k), and most of all a contractor that is familiar with and comfortable with the funding schedule and quote structure these loans require.

Everyone I've talked to in the past initially says "Oh yeah, I can do renovation loans!" and then it turns out they have no experience with them and when it really comes down to it they get cold feet surrounding all the details and paperwork, so I'm really looking for people that have successfully completed these loans, all the way from the offer letter to successful renovation. 

So if you know anyone that has experience with either the FHA 203k or Homestyle renovation loans, please let me know. Also, if you or someone you know has gone through this process as a buyer I would love to talk to you about your experiences as well. 

Or, alternatively, if you have any other proven methods of purchasing properties that need just enough work the bank will not lend on them but not so much work that the price works for hard money, let a guy know, because that is the pickle I continue to find myself in.  

Thanks in advance, see you all at the next meetup. 

[Eddie Gonnella]

@Peter Brandon

Good luck on this! It is a horribly painful process with all the paperwork, but definitely worth it as a way to get your first deal. I’m just refinancing out of a renovation loan that I did last year. A couple recommendations I have:

1. Go with homestyle - basically the same product but less paper work because there’s no 203k consultant. Unless you’re feeling like you really want that help and oversight, then it may be worth it

2. Use as few contractors as possible. The paperwork is enormous and the less contractors the less paperwork you’ll be chasing down. If you are the GC on a homestyle you’re limited to 3 sub-contractors. I would recommend just finding a GC who can do one set of paper work and they can get as many subs as needed for the project

3. The fees are enormous compared to a regular loan. Just make sure you are budgeting in for extra closing costs. Mine were probably 6% instead of the usual 3%.

4. Understand that you’re probably going to pay more than you would for contractors if you weren’t using this program. The extra paper work and licenses are going to remove a lot of the lower priced contractors from the picture

These are all lessons learned. I tried to scrap together a deal so that I would have the most equity as possible at the end. I used 3 contractors, I had to baby sit them constantly for paper work and scheduling. I also couldn’t get all the work into the loan because I could only use 3, so I ended up having to come out of pocket later on to finish things up. In the end, I got a great deal and built a ton of equity but if I could go back even if it meant paying an extra 10k in rehab costs I would have just found a competent GC to deal with everything. If you want to learn the GC life do it on your next deal where there’s not so much paper work and red tape.

Let me know if you have any questions! Hope this helps