First rehab in Covington, how much can I do myself?

Question

Little intro about me since I'm new here. New to real estate investing, own one rental (with a 30 year traditional mortgage) in nky that was turnkey, been renting it out since March 1st, low on the cash flow side but its not nothing and I rented to somebody I knew, maybe not the best decision objectively but they are taking good care of the place so far.

I'm looking at purchasing a house that needs an extensive rehab, I'm talking to a lender about a rehab loan to use for contractors before doing the cash out refi. My question is how much of it needs to be done by contractors? I've done installs/replacements on a couple types of flooring, drywall, cabinetry, outlets, ceiling fans, toilets, showers, vanities, and faucets etc. I'm pretty handy and tend to pick things up quickly, I just don't know when it comes to the roof, electrical, plumbing, and hvac how much I would be allowed to do myself and what I need a licensed person to do or just sign off on, anybody have experience in this sort of thing? Thanks

Brian R. · Answer

Contact Heritage bank. I've used them for my 2 BRRRR's and they have a great program. 1yr interest only. You put 20% to 25% down on the purchase price and then they finance the rehab 100%, similar to a construction loan. You draw money out as work is completed for rehab portion. Estimate a little high on the rehab budget and as long as the total is 80% of ARV you're good. Mine went over budget on both but we added work that we did not plan on doing and used our own cash to cover it. I'm currently on furlough but as soon as I go back to work I'm looking for my next project.

Good Luck

Brian

Good Luck

Brian

Brian R. · Answer

Forgot to mention that Heritage Bank allows work to be done by the owner but the appraiser does inspections for the Draws to make sure the work is being done. If the city allows you to pull permits for it then it is allowed by the bank.

Brian R. · Answer

In Boone county the only permit that you can not pull as an investor on your own investment property is electrical. However if it is for a property that you do or will occupy you CAN pull electrical permits and do the work yourself. Will be inspected by electrical inspector either way. Not sure about HVAC but I added duct work and Boone county inspector was OK with it. Im not sure if it is the same for Kenton county but its not too stringent. This isn't California where you have to get a permit to sneeze and then wait 5 weeks for an OK to do so.

Paul Sian · Answer

Account Closed if any work needs permits then when those permits are inspected by the city they will look for licensed contractors that do the work.  Electrical, plumbing and HVAC are licensed trades in KY.  Anything else you can handle yourself and if permits are not need you can also handle those areas yourself as well.

Account Closed · Answer

Thanks Brian, if I end up doing it all myself I plan to live in it for a few months while looking for the next place and to make sure I didn't miss anything in my renovations. I'll call Kenton county on Monday and find out what permits I would need to pull and ask them what jobs need someone licensed.

Reading some of the other threads on here it is really mixed on the opinions of how much you should do yourself for various reasons. If I end up having it all done by contractors is it better to get one general contractor who knows what you want to accomplish or to spec out each job yourself? Thanks again!

Account Closed · Answer

I guess I should have clarified, the reason I am asking is I may be able to forgo the rehab loan and handle it out of pocket if I am able to do a lot of the work myself, just not sure what stuff generally legally has to be done by someone licensed, thanks!

Chris Flinker · Answer

I am a licensed electrician in Ky. Not only does it depend on the lender it also depends on what type of electrical work your doing. Some requires inspections some don’t.

Odie Ayaga · Answer

Completely depends on the lender. Some don't care who does the work

Paul Sian · Answer

What kind of rehab loan?  If something hard money related then that would be a question to ask the lender.  If it is a government sponsored rehab mortgage pretty much everything will have to be done by a contractor(s).

First rehab in Covington, how much can I do myself?

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