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I'm looking at a property right now that will require quite a bit of work. It's a 3200 sq ft home that is an unfinished rehab. All floors are subfloor. No kitchen. Bathrooms are 40% done. A piece of joist was exposed and has termite damage. (The rest of the home appears solid). Needs new insulation in the attic and basement. Needs a finished basement gutted, etc.
I can do the flooring, the tile, the insulation, and the bathrooms myself. I want to hire someone to do the siding, exterior doors, window replacements, and mold remediation. I'd also need to hire someone to replace the HVAC system.
Has anyone ever successfully done a 203k loan with these terms? Flooring guys especially are crooks. I am not paying some ******* a minimum of $5000 in labor to bang a flooring nailer for a week. A monkey can install insulation. The tile takes a little more finesse, as does a few other things, but I'm not looking to pay for it when I can do it.
As for the rest? I hate heights, and exterior doors can be tricky. HVAC also requires a license and special equipment that I don't want to buy.
I'm guestimating that with my sweat and some strategic sub-contracting I can get this done for between $70k and $90k, depending on the quality of materials. I don't know, because I haven't gone that far yet.
My question is, has anyone ever been able to do a deal like this via 203k?
Thanks in advance.
Last edited by HomeWurkin; 03-14-2011 at 02:02 PM..
How much more will the property be worth after the fixing up?
Purchase would be $225k
Rehab cost could go up to $90k, but I may be able to squeak by with $70k, still using better materials. I haven't priced everything yet.
Comps are around $425k. Considering the current market, odds are that could easily turn into $450k in 5-6 months by the time it's finished.
We plan to live in it a minimum of 2 years. At that point we'll make a decision whether or not to take the profit or just grow old there. We're going to rehab as though we'll never leave.
So in short, the 203k loan, with the price of the home, will not exceed 73% of the appraised value after rehab.
I'm working with someone doing this type of loan right now. Their bank is requiring them to hire a GC (and the GC has to be approved by the bank after submitting a W-9 and all required insurance certificates), and all draws will be made payable to the GC & HO both. The GC will therefore have to pay all the subs. They wanted to do it like you want to as well, but the bank won't let that happen.
I'm working with someone doing this type of loan right now. Their bank is requiring them to hire a GC (and the GC has to be approved by the bank after submitting a W-9 and all required insurance certificates), and all draws will be made payable to the GC & HO both. The GC will therefore have to pay all the subs. They wanted to do it like you want to as well, but the bank won't let that happen.
Yeah I'd rather pass up the house than pay someone to GC. The cost is way too high, and the benefit is leagues below minimal. I'm just not handing over my hard earned money for low level management services.
Quote:
Originally Posted by coastal chic
I'm working with someone doing this type of loan right now. Their bank is requiring them to hire a GC (and the GC has to be approved by the bank after submitting a W-9 and all required insurance certificates), and all draws will be made payable to the GC & HO both. The GC will therefore have to pay all the subs. They wanted to do it like you want to as well, but the bank won't let that happen.
Aside from that, I don't need a GC bringing in their own people, and getting the kickbacks for the jobs.
So I'll give it my best shot. HUD says it's ok, and they'll insure it. So I'll present the best case possible, and if they deny it, oh well. My way or the highway.
Can you do a "self-help" loan where you are allowed to do the work yourself? Some banks allow this with the 203k loan, although I'm not sure if there's a limit on the cost of the rehab.
We initially applied for this type of loan and had to show proof of ability - basically a resume. But we ended up getting a special loan from a large mortgage company in our area - it ended up being cheaper and faster in the long run but had a rather unrealistic time frame for doing the work.
I practice Real Estate Appraisal. I admire your get up and go, 'can do' attitude. May I ask you something, out of concern? Have you spoken with an Independent Real Estate Appraiser that is familiar with 203k Loans? Because, if you haven't already, it may be of due diligence to do so, in order to know what to expect from the asset, from "the other side." Like I have noted, I do not know if you have or not, I just want to make a suggestion, out of concern for your investment.
Can you do a "self-help" loan where you are allowed to do the work yourself? Some banks allow this with the 203k loan, although I'm not sure if there's a limit on the cost of the rehab.
We initially applied for this type of loan and had to show proof of ability - basically a resume. But we ended up getting a special loan from a large mortgage company in our area - it ended up being cheaper and faster in the long run but had a rather unrealistic time frame for doing the work.
Good luck.
Do you mean a 203k streamline?
I'm actually looking into that today. I was just trying to avoid it because that means I'll have to fund this project with up to 50k of my own money. Streamlines only cover $35k. Which is fine, because that's about what the subs will cost me for siding, countertop, hvac, plumbing, windows, and doors.
The big nut, the flooring, I'll pay out of pocket, along with the rest of it
What I'll do is just take a home equity loan when it's done, to get my money back, and then refi shortly thereafter.
Thanks! We all need luck when messing with RE these days!
.
Quote:
Originally Posted by Greeenback
Hi HomeWurkin,
I practice Real Estate Appraisal. I admire your get up and go, 'can do' attitude. May I ask you something, out of concern? Have you spoken with an Independent Real Estate Appraiser that is familiar with 203k Loans? Because, if you haven't already, it may be of due diligence to do so, in order to know what to expect from the asset, from "the other side." Like I have noted, I do not know if you have or not, I just want to make a suggestion, out of concern for your investment.
Well hud requires an as-rehabbed appraisal for 203k's, correct? Yes, we're certainly doing that.
Well hud requires an as-rehabbed appraisal for 203k's, correct? Yes, we're certainly doing that.
Thank you GB!
You are welcome.
I was leaning toward the little things, and some 'what-nots' here and there. However; you seem to understand the extroardinary assumptions that are involved.
Also, it appears you already had a "before and after" Appraisal, along with a feasibility analysis, performed by a qualified Real Estate Appraiser.
I do wish you much luck and success on the investment, overall.
I actually used to be a partner in a home improvement company, back in the late 90's. (aka, a GC) I left the business when I showed up at a job site and saw a sub putting in bathroom floor tile. One kissed right up against the other.
....at that point, and after several other nightmares, I decided that working for someone else in the technology field was far less stressful. So I handed my half of the business to my partner and went to work for a corporation.
Since I'm living in this home, I don't want the GC work left up to someone else. It's not simply because I'm being cheap. It's because I've been around the block and don't want anyone screwing up my home and then hiding it before I see it. That costs me money and time, and if not fixed properly, quality.
As for that bathroom, my partner and I fired the sub on the spot and finished it ourselves. I'm so glad it was just a bathroom job and we caught it before the tile was completely set.
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