Skip to content
×
Pro Members Get
Full Access!
Get off the sidelines and take action in real estate investing with BiggerPockets Pro. Our comprehensive suite of tools and resources minimize mistakes, support informed decisions, and propel you to success.
Advanced networking features
Market and Deal Finder tools
Property analysis calculators
Landlord Command Center
ANNUAL Save 54%
$32.50 /mo
$390 billed annualy
MONTHLY
$69 /mo
billed monthly
7 day free trial. Cancel anytime
×
Take Your Forum Experience
to the Next Level
Create a free account and join over 3 million investors sharing
their journeys and helping each other succeed.
Use your real name
By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.
Already a member?  Login here
Market Trends & Data
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

Updated almost 2 years ago on . Most recent reply

User Stats

15
Posts
3
Votes
Janille Jackson
3
Votes |
15
Posts

Question on 203K Loan

Janille Jackson
Posted

I am a licensed contractor looking for a 203k loan on a property in Englewood NJ. I have a colleague who is also a licensed contractor willing to do a lot the work. 2 questions

Any suggestion on structuring the deal/contract legally of course to remodel or I can’t be part of any of the renovations?

Anyone have a good contact that is very experienced with 203k rehab loans to get a preapproval and share details and advice on the process?

Any calculators in bigger pockets I can use to estimate after remodel value?

  • Janille Jackson
  • Most Popular Reply

    User Stats

    987
    Posts
    536
    Votes
    Paul Welden
    • Real Estate Agent
    • Tempe, AZ
    536
    Votes |
    987
    Posts
    Paul Welden
    • Real Estate Agent
    • Tempe, AZ
    Replied

    @Janille Jackson

    HUD guidelines allow borrowers to do their own work on a 203k (called a self-help arrangement).

    But 99.9% of lenders will not allow this because of the liability they would inherit, possible timeline/deadline violations, etc. 

    Even if self help was approved by the lender, the borrower/contractor will have to include the profit and overhead into the pricing that is added to the loan just in case the borrower/contractor cannot finish the project, there needs to be sufficient funds in the rehab account to pay another contractor to finish it. 

    So, you won't save $ on the loan amount, or down payment amount, or even your monthly payments by doing a self help.

    Any money left over in the rehab account (think sweat equity for a self help 203k), you can do additional work (Standard 203k only) or use it to reduce your loan balance (monthly payments remain the same). 

    Best to use a Certified 203k Contractor or get accredited yourself, which could be a good selling point to the lender when you ask them to do a self help 203k. 

    Hope this helps! 

    Loading replies...