All Forum Posts by: Matthew Porcaro

@Gabby McNabb

Always be sure to use your network as well! The 203k process is only for top notch contractors that can float themselves and have a good reputation.

This isn’t for the fly by night guys.

@Simon C.

They won’t let you do it yourself unless you’re a licensed contractor. Even then, there’s limitations. Your work definitely can’t exceed $30k

Trust me, you want to leave it to the pros. 🙂

The banks are not looking to take the risk of someone taking too much time or going to slow with it.

The mortgage backed securities market just isn't buying anything less than subprime.... People that are gonna get hit the hardest are ones with less than desirable financial profiles, but for your typical W2 earners that still have their jobs or work in industries that can go virtual during isolation, things should continue as usual. 

Remember, a 203k loan is an owner occupant loan, so you will need to move into that property for at least a year to qualify. Banks will be sure to check this during underwriting!

It's most important to go to a lender first. The lender is the one that will make or break a 203k deal. The realtor is just along for the ride. 

@Anthony Landestoy

Don’t ask them if they do 203k loans, you’re going to confuse them.

Did you create your scope of work yet with your 203k consultant?

Once you do that, call a bunch of contractors to come in and do the estimate. Use Angie’s list/home advisor , and only look for qualified and professional contractors.

Give them the scope of work and tell them to estimate what it will cost to do each line item. Compare it to what the 203k consultant says it’ll cost and go from there

You may have to do the contractors paperwork for them. Take the guesswork out of it for them. Fill out the forms just make them sign and send you the important stuff (insurance, license, etc)

@Ade Owoseni

First step when doing a 203k is find an experienced lender that knows how to do these loans backwards and forwards.

Interview them about how many they’ve done, and also if they can make any contractor recommendations.

Get pre-approved for your max amount.

Doing the work yourself under the scope of the work of the loan is extremely limited. You’d have to just do it on the side, and pay for it out of pocket, unless you’re an experienced contractor (they will check you out if you’re qualified to do the work)

From there, create a scope of work of what you want to do with the 203k consultant, and then start shopping for contractors. Once the loan closes you can start the work.

So the cool thing about 203k’s are you’re able to wrap in your mortgage payments while the rehab is going (up to 6 months max) into the loan. 

I unfortunately didn’t find out about this until after the fact (my lender was inexperienced with these loans - BIG no no when doing 203k’s - always choose an experienced 203k lender) but lucky for you, you know now and can just wrap it that way ur not paying rent + mortgage or mortgage + mortgage on a home you can’t even inhabit. 

If your lender is advising against it, find a new lender. Google 203k experienced lenders in your market. I could even refer you to some I’ve found do it. 

My 203k took forever, again, since my lender was inexperienced and bit off more than they can chew. 

But I know a lender that specializes in them and he gets it done typically in 45-60 days. 

If you ever have any other questions feel free to reach out. :)

@Joshua Heilman

It sure is, and it’s exactly what I did!

Essentially I bought a foreclosed duplex property for 270k, and wrapped the 80k rehab into the 203k loan so my total loan amount was $350k

After I rehabbed it, it reappraised for $500k, so I had enough equity to refinance out into a conventional loan.

A short time after I moved in with my fiancée and then rented out both units, so the property actually cash flows 2k a month currently.

I now work with private and hard money lenders and put up the $150k equity I gained in the house as collateral to purchase new deals

@Daryle Smith

Basically everything depends on finding a good lender. So make sure you prequalify them by asking how many they’ve done.

I’d also look into how much foreclosures cost in your market.

The rehab work will range depending on how beat up it is.

Do you know what areas you’re looking in?