New to Real Estate · Whittier, CA · Member since 2021 · 25 posts · 21 votes
Been doing lots of reading and almost ready to begin my BRRRR journey, but I came across the Homestyle Renovation loan option while reading up on Hard Money Lenders. As a complete newb, would the HomeStyle Renovation be a recommended path to take considering I would only need 3% down and low interest rates? As stated, I'm new and have never completed a real estate investment purchase. I'm a high school teacher who would like to use BRRRR to help me reach financial freedom. I prefer to work with an agent as I learn the process of BRRRR, so from what I've read on the Homestyle Renovation loan, it looks like a nice option for completely new investors like myself? Is working with an agent also advisable.
Also, please don't message me privately unless you leave a comment below first. I am new to Bigger Pockets and I tend to thing people who message me privately are scammers.
Investor · Washington, DC · Member since 2017 · 428 posts · 205 votes
5y
@Mario Casarez hey Mario, Id agree with @Paul Welden - HomeStyle is a great renovation loan program (and is still available) to jumpstart your BRRR investing, but it really depends on a few factors to determine which loan option is best between Homestyle, 203k, hard money, etc.
For example, if you’re buying a single family property and are eligible for homestyle it’s generally a bit of an easier process than 203k and generally better rates than hard money, but there are always trade offs and certain situations may call for a different loan program. Id definitely recommend finding both a good agent and a good lender familiar with rehabs to help determine what loan option suits the situation best.
Banker · Nationwide · Member since 2020 · 2k+ posts · 1k+ votes
5y
Mario,
You have some options and FHA is one of those options which does offer the 203K loan for renovations rolled into the loan. They can be very time consuming and stressful in some cases just as an upfront FYI. You also have the option to buy with a low down payment and do a cash out refinance after 6 months to take out cash to remodel/renovate. It all depends on your situation and goals in regard to what will be the best loan option.
If you had 20% to put down you could always avoid that MIP - mortgage insurance premium that gets charged on a monthly basis. That MI - monthly mortgage insurance payment could go towards a HELOC/LOC Home Equity Line of Credit after you buy the home. a HELOC in most cases will go up to 85% CLTV combined loan to value which basically allows for you to use funds after the purchase for renovations to improve home and its value. Than after renovations are done you could refinance the home and combine both the mortgage and HELOC into one loan with one payment!
If not and you would rather go the 3.5-5% down than FHA would probably be your best bet because Homestyle Fannie & Freddie have been on hold as far as funding due to COVID and market scarcity.
Real Estate Agent · Tempe, AZ · Member since 2011 · 1k+ posts · 543 votes
5y
@Mario Casarez Fannie Mae Homestyle rehab loans are great for owner occupants and investors. Same thing for the Freddie Mac CHOICERenovation rehab loan.
The FHA 203k loan is only for owner occupants.
All 3 of these rehab loans are great for using the BRRRR method especially if you will be an owner occupant because of the minimum low down payment.
Definitely work with a real estate agent who is familiar with and excited about BRRRR. I think you can find quite a few of them here on BP.
None of these rehab have been on hold b/c of COVID, like @Jason Wray has suggested. There were a few lenders who opted to temporarily pause originating them, but there have been and still are plenty of lenders who never paused them and are still doing them.
Investor · Washington, DC · Member since 2017 · 428 posts · 205 votes
5y
@Mario Casarez hey Mario, Id agree with @Paul Welden - HomeStyle is a great renovation loan program (and is still available) to jumpstart your BRRR investing, but it really depends on a few factors to determine which loan option is best between Homestyle, 203k, hard money, etc.
For example, if you’re buying a single family property and are eligible for homestyle it’s generally a bit of an easier process than 203k and generally better rates than hard money, but there are always trade offs and certain situations may call for a different loan program. Id definitely recommend finding both a good agent and a good lender familiar with rehabs to help determine what loan option suits the situation best.