All Forum Posts by: Brentin Trent

@Jaysen Medhurst I think you may be misunderstanding the situation. I would not request nor expect that I would draw any loan funds for work which I am completing. I have cash to complete some of the renovations. As you stated a 10% or 5% down payment would further work to improve that cash situation.

I am primarily wanting to leverage the homestyle program for the acquisition (although it is a rehab loan). The banks I have talked to do not want to touch seriously distressed property (i.e. non functional plumbing, electrical, no kitchen). Using a homestyle program, the condition of a distressed property becomes less of an issue. However, if I can finance the purchase price, that puts me in a much better cash position to get the work done myself (perhaps by a licensed GC), but without the red tape. 

I'm just struggling to understand whether all rehab needs to fit in the SOW and thus be rolled into the loan.

@Chris Mason

I think this is the advice I was looking for. Especially given the fact that (I think) the homestyle has no preloaded PMI, so I would just pay monthly PMI for 6 months or so (no biggie).

That being said I do have a few concerns / questions.

The appraisal on these loan types is done "as completed" meaning the total acquisition cost (purchase, and rehab) that the bank will lend you is based on what they think the home will be worth after the project is done. If I am doing a lot of the work myself (with my own cash), then does that work factor into the SOW, and by extension factor into the "as completed" value?

Let me drag this out with an elaborate example: Let's say, theoretically, I decide I will do all the plumbing, electrical, and finish work myself. In this case, I leave it out of the SOW, since I'll do it "on the side". If it is left out of the SOW, I assume it isn't considered in the "as completed" appraisal. given this the bank says that the house, when finished, will have non functional plumbing and electrical systems (because they were non-functional upon purchase) and thus isn't worth anymore than I paid for it. In that case they may not want to provide the loan funds / rehab funds. Is this a situation I could run into? 

@Jaysen Medhurst seems to be suggesting a similar approach. Jaysen, in saying "the homeowner CANT do the work", you mean to say that they can't do the work within the SOW or they CAN'T draw from the loan rehab funds? To be clear, I have no experience with this loan type, so maybe I am totally misunderstanding the process.

Can the bank actually control the work I do, meaning can the bank say that the homeowner can't do the work, or is the stipulation actually that the homeowner can't do the work and then take a draw from the renovation budget. (i.e. If I pay myself from my own renovation budget it's okay)

I think the way I suggested is definitely doable, but more of a PITA, and more likely to run into issues with the bank/ an uncoopertive contractor. I'd rather take cash in hand and be creative with getting the work done and earn some sweat equity! Lot's of questions.

I have some cash that I could put into the rehab (and hard money is always an option), so either way this loan type seems to be a powerful tool for acquiring distressed properties that otherwise wouldn't pass conventional financing.

Thanks for the feedback,

-Brian

I am in the process of purchasing a home in Baltimore County that will require extensive rehab work. I will be financing the rehab by utilizing a fannie mae homestyle renovation loan.

The project will be a large full home rehab/renovation of a 1940's home. I would like to do a fair amount of work myself as a learning process and to save money where I can, while working with the GC. I am seeking a qualified GC who can put together the SOW, communicate well, and finish the work on time and up to spec.  Please reach out so I can provide more details.

Thanks a lot,

-Brian

what about the other side of the equation. You work with the GC and do lots of work yourself. As a result the GC doesn't draw all the funds originally estimated for rehab costs. What happens to the left over money?  

I am considering a homestyle loan in order to allow me to rehab a property without coming up with not just the rehab cash, but also the purchase price. I'll be putting only 20% down.

I Understand that I will be able to finance the purchase and rehab costs. Everything that I have read about these loan programs suggests there is a requirment to hire a licensed GC to do all work.

I really want to earn some sweet equity, and want to know what my options are. Does anyone have experience doing this? I want to do the work myself whenever possible. Is it feasible to do work myself and then have a licensed contractor "sign off" in it?

Also, I assume the bank will have me get the GC scope of work. Do I have to stick exactly with the SOW. Do I have to stick with that GC?

Thanks in advance for any info.

-Brian

Welcome Elizabeth, I'm also a beginning investor in the Baltimore area. Good luck with your sale, and hope to hear all about it.

Hey Bobby. I'm also in the Baltimore area looking to perform a similar strategy. Good luck!

Hey Bobby. I'm also in the Baltimore area looking to perform a similar strategy. Good luck!

Janet, Roughly, What neighborhood of Baltimore? You suggested it was a rough neighborhood. There are a lot of areas in Baltimore where you can find properties for next to nothing, but I wouldn't trust that I could sell a lot of those. It's encouraging that others are investing in some of those places and seeing success. Congratulations!

I'm currently working on my real estate license in the state of Maryland, in order to facilitate my own buying (and eventually selling) of properties, in order to build an investment portfolio. I'd like to keep open the option of wholesaling some deals in the future. It seems to me that there is a conflict of interest. I think I know the answer, but I really want more details. Can I be a licensed real estate agent and also a wholesaler? Is it state specific?

The basic question is stated above, but I think it comes down to rules involving "non-agency" basically the idea that I am explicitly not the sellers real estate agent. Any information would be helpful.