I just received an estimate from a contractor for a 203k Loan. Property is a 2100 square foot duplex that needs an entire rehab. Gut everything, mold issues, stolen copper, and basically nothing salvageable. However, the structure of the duplex is sound. The estimated price was around $85 dollars per square foot totaling $175,000. I was figuring around $100k and would be willing to put an offer in if it was a bit higher than that. This contractor does a decent amount of 203k loans and was recommended by my lender. He mentioned that he is very busy this time of year and my thoughts are that he is charging a premium because of how busy he is but it could also require that much work.
Now I have a decision to just let it go or get another estimate. How easy is it for contractors to get acclimated to the 203k loan process? I have some contractors in my back pocket that I am friendly with but I they have not been through this process before. Does anyone have experience with contractors who haven't gone through the 203k loan process before?
The 203k process is Not that complicated for a GC that does commercial, or decent size residential work. You work on draws, submit invoices, work gets inspected.....SOP for most legit contractors.
Definitely get a second estimate if you're not comfortable with the first. I don't know what his crew is like but if hes very busy, he might be adding some contingency to his bid. Also, how did he break down his proposal? Did he give you a single cost or a cost breakdown by trade? I always prefer the latter for obvious reasons.
203k is a pretty simple process for the contractor. he must be able to provide funding for the project up to the first draw. draws are simple, he just has to get his work inspected then submit a draw request. check gets cut and sent overnight to you.
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