All Forum Posts by: Mathew Gunkel

Welcome to BP @Michael Ruley!!

@Drew Scafani your loan officer really shouldn't be giving you any advice on your offer amount.  This should be coming from someone with strong market knowledge (Real estate agent, you, etc.). 

What he/she is probably saying is that in order to have the seller agree to pay 9k towards your closing costs you may need to pay 9k more on the home sale price.  It's a way to tie the closing costs into your loan.  I hope that clears things up.

-Mat

Excellent 203k blog @Steven Gesis!!

Agreed @Wayne Brooks.  The site merely provides leads that you need to thoroughly vet as you should with all contractors.

@Corinthus Wilson I'm not sure how well links work on BP, so I copied some of my lenders 203k contractor vetting process.  This is some good info for you and a standard to hold your lender to...I hope it is useful to you.

By Jeff Onofrio

Saturday, December 31st, 2011

There's a common misconception that contractors need to be certified in order to participate in FHA 203k loans. This isn't true! There is NO actual official 203k training process that is certified or approved by HUD or FHA.

We make sure you’re going with reputable contractors.

The way we determine which contractors are going to be able to participate in FHA 203k loans is by:

1. Contacting them personally

2. Going over the premise of the loan

3. Making sure they understand how it works

4. Taking the time to go through their financials- making sure that they have the means and knowledge to be able to participate in one of these loans

We only select REPUTABLE contractors!

Certain contractors, if they can't float the loan- or "float the job," as we say, then they're not going to be able to participate in FHA 203k loans. Essentially, "floating the job," means being able to finance the job right from the start. With a Full 203k loan, contractors don't receive any upfront cash. So, it's important for contractors to understand this all up front, and we make sure of this!

We make sure contractors meet ALL qualifications!

We always do the following with contractors that work with us:

1. Contact References of the contractor to make sure that they are of sound business practices

2. Check on Licenses

3. Check on EDO Insurance

4. Make sure they are licensed and insured- and bonded, if necessary

So these are the things that we will do as a lender to see if they understand and whether or not they meet the qualifications of a 203k contractor.

There are some independent companies that certify contractors.

One of these is the The 203k contractor directory at 203kContractors.com, which is owned and facilitated by Paul Welden. He's got a great resource. He goes through an intensive protocol of training the contractors so they understand the program from start-to-finish. It's a 30 day- all wrapped into one course- kind of program. Then once they've completed the course, he puts them through a test on which they must maintain a minimum score of at least 80%. If they maintain that 80%, they get a nice, big, shiny FHA 203k certified directory logo. We have some of these certified contractors on our Web site currently, so you can always use these kind of contractors- and know, full-well, that they understand the program and know that they are able to maintain the necessary requirements to participate in an FHA 203k loan.

We make sure our contractors REALLY understand the program!

We always use and look for contractors who really understand the program. But, back to the main point, no, there is no certification program through HUD or FHA. It's our job as lenders to make sure that the contractors understand how the program works and make sure that they are going to be able to meet the requirements and get the job done!

Hey @Corinthus Wilson! 203kcontractors.com has a database of "203k certified" contractors.  This doesn't mean they're good, but it's a good place to start.  Be sure to vet them (how many 203ks they've done, customer references, etc.).  My local lender has had success working with contractors provided by this site.  

I also agree with @Wayne Brooks.  Assuming your lender has experience with 203ks, they should be able to provide recommendations of contractors they've successfully worked with...nothing beats a good referral from someone with a vested interest in your success.

Another option is to hit your local REIA Rehabbing subgroup for a solid referral, but that will probably take time you don't have given that you are midway through the process.

Best of luck!!

-Mat

@Robert Guilfoyle Congratulations on taking your first steps!! In addition to the endless wealth of info you can get through the BP forums and podcast, definitely try going to local SJREIA meetings.  I just attended one yesterday in Maple Shade for $15 (free if you're a SJREIA member), and I met some great people. Between Philly and SJ there seem to be multiple meetings every week on all sorts of topics (Rehabbers, acquisitions & exit strategies, land lording, etc.). The meetings have been very welcoming and newbie friendly. Plus it's an opportunity to meet with people who are already doing what you want to learn.

Best of luck!!

-Mat

@George P. and @Jonna Weber hit it on the head. Go to local REIA meetings (the app "meetup" is great for finding those) to meet other investors who might make great partners who might be able to help with financing, experience, or referrals. Also, do seperate searches here on BP for hard money lenders and private money. That way you can get a better idea of the pros & cons, and what reasonable interest rates, fees, terms etc. can be expected to avoid getting gouged. Either way, you will likely need to come to the table with at least enough cash for the repairs + contingency buffer unless you find carefree friend/relative private money or a partner who is hands off and relying on your skills and time to execute the project.

Best of luck!!

@David Gunkel Hello Stranger! As far as driving for dollars over such a large area you may want to consider using a wholesaler list provider like Listsource to get you set up with some great leads (at a cost of course). They can identify multifamily, non-owner occupied properties in your target areas that likely have a good amount of equity in them.  They have an impressive array of criteria you can plug in to help find great leads...then you could drive by and look for disrepair or other signs of distress.

I'm not 100% on cost, but I don't think it's insane.

- Mat

Thank you @Christian Bors

@Brent CoombsI have no experience in HELOC's, so I am trying to get my bearings. It sounds like I should look into my primary residence first strictly on the basis of getting more favorable rates/fees, and only look at the rental as a last resort...thanks!!