Des Moines, IA · Member since 2016 · 41 posts · 8 votes
I am looking at a property to purchase with a 203k loan in the Quad Cities area particularly Davenport, IA. I am hoping to purchase a home rehab it, live there a year, then sell or rent it. I have a property in mind and am ready to get bids.
Does Anyone have a capital G General Contractor they would recommend using. I do not think I have worked less than 40 hours a week in the last year so I do not want to watch the subs or worry about work being done. That being said I do have a fairly flexible schedule and do not mind dropping in every day to check on progress.
Investor · Davenport, IA · Member since 2016 · 121 posts · 45 votes
9y
Hey Jared,
I am also in Davenport. I have a list of contractors, but (correct me if I'm wrong) don't the contractors have to front the cost with FHA 203K? If so, I'm not sure how much luck you would have with them but it's certainly worth asking. I would like to do the same thing you're doing & rent out my house in McClellan Heights in about 11 months. I think I am going to try to find a private lender to fund my project though as I've heard there are a lot of obstacles with the 203K loans. I don't really have any properties or experience yet, but I like networking with people that are interested in the QC. Would love to sit down and talk with you sometime (Even if it's not about anything important).
I am actually not sure I know that the money is put into escrow at the beginning of the project and you are allowed 3-5 draws from the escrow to pay. The initial draw should be enough for permits and materials, and additional money is released as work is completed. "The Book on Flipping Houses" by J Scott does not recommend paying for work until it is complete anyway.
There is a quick article on getting a 203k loan Getting an FHA 203k Loan. It is lacking detail but is a pretty good overview.
The 203k loan consultant in Davenport is Russell Upton. He has some contractors that do 203k loans but indicated that they were pretty busy right now. I think using the consultant is like training wheels it sounds like they are supposed to help with a lot of the details. Role of a 203k Consultant.
I would enjoy meeting up. I also have zero experience I have done a lot of research and am anxious to get my first deal under my belt.
Investor · Davenport, IA · Member since 2016 · 121 posts · 45 votes
9y
Thanks for the information, that makes sense. I definitely agree that you shouldn't pay your contractor labor in-full until you have a satisfactory product. I've heard of a lot of people getting burnt when they pay up front. As long as the contractor is licensed and you're getting them materials and permits, I would think that opens your spectrum up quite a bit. Also, unless you have a project manager I would suggest checking up on your contractors daily.
I'll connect with you on BP and we can schedule a time to talk more.
So an update on the payment question. It depends on what sort of 203k loan you use.
There is NO up front money on a Full 203k project:
The Full or Standard 203k is a reimbursement program. The contractor must complete some work prior to calling for an inspection. The consultant will inspect to see the work was completed in a professional, workmanlike manner, then sign off so the lender can pay for that work or percentage of work that is complete.
203k streamline:
Can get money up front to start the job. Typically the loan closes and six weeks later you get 35-50% of the money to start the project. Evidently you can insist the first half is paid from escrow without a wait but I don't know if that makes it go much faster.
I am attempting to do the full, so this does not bode well for my project. I did line up two bids but neither of the companies had done a 203k job...
Guys, could you recommend a great home inspector in Davenport? I’m looking at a multiunit property but I need an amazing inspector that is going to tell me what’s really going on with the building. Appreciate it!