All Forum Posts by: Matthew Porcaro

Great way you can find what lenders are doing 203k's in your market is by googling "203k endorsement summary" and scrolling down to the most recent month, and then going through the notepad file to see which companies are doing them in your market. 

Some of the companies are end-buyers of the loan, but they will more than likely be able to give you some names of loan officers in the market that are doing these consistently. 

Hope this helps!

Matt

You can refinance your home with a 203k or homestyle loan, and finance the ADU addition that way. It will obviously bring up your mortgage payment each month, but you can assess that vs. how much you will be receiving in rent.
With rates so low right now, it still might work out!

203k loan is how I did my first deal. Bought a beat up old two-family and renovated it. Lived in one unit and rented out the other for a little while, and have since moved out and now rent out both units for cash flow.

I see that you're a contractor and that will be a big benefit when doing your 203k project. The only downside is a lot of banks don't allow you to do your own work. It's a case by case basis, and depends on the size of the scope. 

I'm sure you have other contractors that can GC the work for you. My father is a contractor, and I wasn't able to use him since we were in the same household when I got the loan. We had one of his contractor buddies take the role as GC for the project. 

It honestly worked out better that way. No family feuds haha. 

Hope this helps! Good luck.

 Hey man, 

So in my case I did a regular refinance into conventional right away after I was finished with the rehab. Cash out refinances from 203k’s aren’t always available by banks. 

I also preferred using a HELOC instead of a cash out refi because I didn't want to increase my mortgage payments permanently. I only wanted to pay for the money whenever I used it.

The HELOC came a year later. Which in retrospect I would have done the HELOC while I was still owner occupant of the property because I would have gotten a higher LTV.

Hope this clears it up. If not you can always DM me with any other specific questions. 

thanks!

@Orlando J Boyd

Search 203k consultants in your market, call them up and ask them if they know of any lenders they’ve worked with that are experienced.

@Justin Glass

Simply put: the 203k “limited” as it is now referred to is a 203k renovation loan that limits you to a $30k renovation budget.

Because of this smaller budget, the paperwork is less involved, the construction draws are 50% up front and 50% at completion, and the work does not require a hud consultant.

@Teacha Wong

Refinance with a 203k or homestyle loan. You can finance your ADU construction with those loans.

@Bryan Rodas

The loan isn’t meant to be used over and over again. It’s an owner occupant loan.

Why are you worried about using it over and over if you haven’t even used it once yet?

The 203k loan was a good loan for me to get my first flip under my belt while also getting a place to live and living for free with a tenant in my other unit.

After that, I had a lot of equity that I used a HELOC for to leverage me into my next deal, combined instead with hard and private money which is much easier to use going forward.

@Rachel LeClaire

3.5% is really pretty minimal and should be from your savings. It’s not hard to muster up that much. Private lending doesn’t make too much sense when you’re talking often less than 5 figures.

That said, family members can give it to you as a gift, not on any private lending agreement.

Your family member signs an affidavit stating that you have no formal agreement worked out for repayment, and that this is strictly a gift

Sounds like you'd want to use a 203k or homestyle. If you want to do a multifamily, the FHA 203k is more forgiving on requirements for down payment and reserves for multiple units.

The 203k allows you to wrap the renovation costs into the loan, and since it's an FHA loan you can continue to benefit from the 3.5% down minimum.

Especially right now, you're going to be financing the construction costs at a better rate than any private lender would give you!