Anybody with experience using 203k loan in Chicago?

Chicago, IL · Member since 2017 · 15 posts · 7 votes

I've been thinking of trying to purchase a buy and hold three flat (Multifamily) property in Chicago using 203K loan. If you have done this, what are your thoughts? Do you have any advice?

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Corey D. McCray

Real Estate Agent · Chicago, IL · Member since 2016 · 44 posts · 22 votes

Good product. Your contractor must be 203K certified. Thus they will be licensed bonded and insured. It doesn't necessarily mean they are good though. The bank has checks and balances in place to make sure their money is protected and the contractor is doing their job. Money is disbursed in several draws. The contractor must be capable of doing the job without looking for payment all the time.

The bank will send out a FHA 203k inspector to check out the property and scope of work before you even do anything to the building to make sure it is all above board and accurate.

I like it.

Which one are you looking to do? Streamline or full?

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Michael Facchini
Lender · Chicago, IL · Member since 2017 · 438 posts · 193 votes
7y
@Account Closed, I'm very experienced with 203k and absolutely endorse the program for primary residence purchasers looking to HouseHack with low down payment (3.5% on the total budget - Purchase Price + Hard Costs/Rehab) on a 2-4unit property. I could speak for hours on it, and much too much to write, but gist is you need to find the right GC to work with and have your homework done upfront. When I say "homework", I mean having a GC you know/trust that has been vetted and will deliver as promised. I've learned some hard and expensive lessons over the years by teaming up with people that are disorganized, dishonest, over-extended, under-experienced, unrealistic, etc. Anyhow, from there you and the GC need to draw up a detailed road map with the scope of work and budget, which then drives the appraisal and mortgage process. Changes to that road map mid-stride will complicate the process and add headaches. 203k loans can be closed in 30 days if you're really buttoned up on the front end with the aforementioned. Otherwise, plan on 45 days...and sometimes longer if your scope/budget is a moving target. Make sure to work with a lender that specializes in renovation financing too - otherwise it could be a painful experience. Not all lenders are good at renovation financing.
But overall, I love the idea of building equity through marketable improvements. If it's your first project, don't bite off more than you can chew. Perhaps keep it to more aesthetic type improvements, updating, etc. Seek good counsel with the right GC, a solid HUD consultant, an agent that knows reno and multi-family, and a lender that does as well. The right team is key. It takes a few buildings to cut your teeth, but it's worth it and can really open up inventory in a tight market that we're in (for 2-4's in Chicago at least). Happy to be of any help, so never hesitate to reach out!
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Victor SoBusiness Member
Real Estate Agent · Chicago, IL · Member since 2017 · 324 posts · 193 votes
7y
Hey @Kevin Kong .

Truthfully, I don’t know any good “investor friendly” agents in those areas. My current agent doesn’t invest himself and he doesn’t service those areas. He and I get along and he’s great for me because I give him criteria I’m looking for and responds promptly. That’s how I got my current duplex but I basically ran all the numbers and did the research myself. He did however get me comps very promptly and did misc things I asked him to.

However, if this is your first property, I would recommend networking and finding an experienced investor friendly agent to help you through the process.

Maybe we can attend @Brie Schmidt ‘s once a month networking event.
Victor So Real Estate LLC517 Reviews
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Kevin Kong
Chicago, IL · Member since 2017 · 38 posts · 11 votes
7y
@Victor So oh I see. Nice maybe I can gather a list of my own and find some investor realtor to help me in my journey. I will definitely look into this meeting with Brie. That would probably help me an enormous amount. Thanks again!
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Kevin Kong
Chicago, IL · Member since 2017 · 38 posts · 11 votes
7y
@Daniel Cullen thanks for the advice! I never really thought a contractor would do that but then again you really can’t trust a lot of people these days. You’ll definitely be hearing from me asking a bunch of questions so thanks in advanced for your patience.
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