All Forum Posts by: Kristy Pedersen

I'm looking at a property in Philadelphia that would need a full gut rehab. I want to BRRR it. Purchase price is 99k, renovation cost is ~100k. ARV maybe 270-280k.

My question is regarding the appraisal value. It's located in an area with a lot of similar renovations, but that are a few blocks away. If you know Philadelphia real estate you know that it's very block by block where some are good, but the next one over could be bad. This house is on a nice block, but it's pretty isolated from the renovated houses and I don't think would be considered by a homeowner looking. However, I think it would be great for a renter. Do appraisers have the same bias towards location that a homeowner looking to buy a house would or would they just look at what houses in the area sold for?

What I'm getting at is, based on houses sold in the area and condition of those houses I think the ARV could allow me to refinance out all of my capital, but I'm depending on the appraised value to be unbiased. What has been your experience with BRRR?

For reference, my house is in the brewerytown area, ~1400 SF and the full gut reno rehab cost was $110k with a 203k loan. This is with nicer finishes, all new HVAC, windows ect. Definitely heed the advice of finding a good contractor. Mine told me it would take 3 months and ended up taking 8 months, so holding costs were a bit higher than expected. In the end it was a great investment decision, good luck!

I don't have your exact situation, but I could tell you my experience.. 

I bought a home in 2017 with a FHA 203k loan at 110k. I put ~110k of work into it in. I filed a tax exemption and was approved for it using a building permit that showed $110k worth of work was put into it. My taxes now are on only the value of the land prior to the rehab. So even though my house is now worth ~300k + I am paying taxes on about 90k. I took a screenshot of my property's stats from the phila.gov website so you can see how the value has changed over time and my improvement exemption:

Hope this helps!

I purchased a home in April 2017 with an FHA 203k loan. I’ve been living in the property since December 2017. I know that the IRS offers capital gains exemption for people who have been living in their properties 2 out of the last 5 years so my question is for my personal situation.. does that mean two years from when I closed on the house in April 2017 or two years from when my contractor decided it was occupiable in December 2017?

@Eli M. Finance of America

@Anthony Reyes just came across this thread and interested in doing the same thing. Have you learned anything since this discussion?

I used Homebridge for my FHA 203k loan and they were great. My loan officer doesn't actually work there anymore or else I would 100% recommend him. I'm working with FOA now to refinance into a conventional and so far they have been great.

@Michael Noto I've owned the property since April 2017 and finished the renovations to a point where the HUD consultant and contractor deemed "livable condition" in November. Unless there is a clause that says I have to have lived in it for 1 year, then technically I have owned it for more than 1 year

Originally posted by @Chris C.:

Getting rid of the PMI makes sense if it actually lowers your payment. Make sure the higher interest rate does not offset what you are saving in PMI.

Also the logic of paying more interest to save taxes is nonsense.  Why pay the bank an extra $100 to save $30 on your taxes.  Just pay the $30 in taxes and keep the other $70.

 Makes a whole lot of sense! As long as my appraisal goes for how much I'm thinking, the refinance to a conventional should drop my fees. Finance of America is estimating a $73 savings per month. Does anyone have experience with one bank vs another getting a higher appraisal? I'm guessing BOA is offering me such a low rate (4.6 vs 4.9-5.2) because their appraisal is expected to be low. 

Correction - $153 in mortgage insurance