203k loan work may not be able to be completed at quoted price .

Investor · CT · Member since 2019 · 17 posts · 5 votes

I have closed on a 3 family house hack using a 203k loan . The general contractor is supposed to upgrade electrical so each unit is on its own meter and add two heating systems. The whole house is currently heated by one large steam boiler. The subcontractors quotes seem to be coming in over budget and the general contractor although easy to deal with has gotten nothing done for 3 months . What happens if they can’t get it done for the quoted price ? I have already got the units I’m not living in rented and have great tenants . It sucks paying for their heat but the numbers are still working . Can the mortgage company call me on my note if the contractor can not complete work ? What if the contractor can only get one of the heating installed at this price ? What are my options ?

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Jonathan StyerBusiness Member
Real Estate Broker · Columbus, OH · Member since 2018 · 330 posts · 396 votes
4y
I would start by speaking with your lender and explain what is going on. They are probably going to be your best bet to be able to walk you through this and help. Remember, you're in this together as they has skin in the game too. Good luck!
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Michael Dumler
Real Estate Agent · Atlanta, GA · Member since 2020 · 1k+ posts · 1k+ votes
4y
@Douglas Chasse yeah, speak with your lender. I've heard the renovation for an FHA 203k must be completed within six months and verified by a HUD consultant. Furthermore, I thought the lender had to receive a quote from an FHA-approved contractor before sending it to the loan originator for underwriting to close. Not sure how you were able to close on the property without all of this first being verified.
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Douglas Chasse
OP
Investor · CT · Member since 2019 · 17 posts · 5 votes
4y
@Michael Dumler . They are 203k verified and all the paper work was legit . I just think they may have overlooked the cost of hvac subcontracting with the price of work going through the roof . I’m going to contact the lender tomorrow. The crazy thing is the house is fine as is, it was fha that made me take out rehab Loan because they wanted each unit to have its own electrical and heat. Thanks for the advice !
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Douglas Chasse
OP
Investor · CT · Member since 2019 · 17 posts · 5 votes
4y
@Jonathan Styer thanks for the advice . The house house is still working out great , I just want to make sure I’m holding up on my side of the bargain.
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