All Forum Posts by: Arthur Banks

@Rick Baker I'm no expert as I am currently going through my first home renovation loan, but I've chatted with a few colleagues and the process, hurdles and outcome all seem to be about the same.

Here's what I have going on: I'm purchasing a 2 unit using a 203k streamline. Streamline because the required work is less than $35K. Anything over that would be a full 203k and would require the use of a consultant.

My issues have been A) finding a contractor who could/would do the repairs all in for under $35k. B) having all the required information the bank wanted up front to get the contractor approved. I went with a contractor referred by my agent as the contractor claimed he'd done 203's before and his numbers were good. The next issue I had was said contractor didn't have 3 business referrals as requested by the bank. Business referrals being anyone he's done business with and either paid for service (sub contractors) or had a line of credit (small business, no big box store E.g. Home Depot, Menards, etc). So I had to start all over with finding a contractor. That took a couple more weeks. Finally found one who is a 203k contractor and well, he turned in his bid only to have the bank tell him the business referrals needed to be in business for at least 2 years and NOW they've added the requirement to have 5 referrals of previous jobs. That was something I feel should've been spelled out from jump. Oh, yeah, almost forgot. They requested a few things to be added to the bid based off the inspection report. Some were cosmetic and that made no sense. So needless to say the contractor had to adjust the bid and keep it under budget. He was good about it.

My advice is find the contractor who's done 203 before if possible. If not, make sure the one you chose understands there will be a lot of back and forth with the bank between calls, email and paperwork. Most contractors I know don't sit in the office and I did have a couple tell me the bank is asking for too much and quit. So I went thru a couple before the one I have now who says "Never had to do so much back and forth, but if that's what they want." I can't tell you how many times I was worried he would walk.

Had the repairs been over $35K, I would've had to use a consultant who job would've been to tell me what was needed as opposed to what I wanted. If you have big issues like foundation or major roofing, you would have to use standard 203k which requires the consultant. And he/she works with the contractor directly. Outside of what the inspector listed, my bid was based on cosmetic repair/updates (kitchen & bath remodel, paint and flooring and misc things like new door hardware).

As I told @Brie Schmidt I finally got the appraiser out yesterday (had signed contract in early March) and now the rush to get appraisal report and to underwriting by early next week as I have until June 9 to close by. One more headache... due to all the above, I missed closing and had to pay $375 to HUD for a 2 week extension and well, that two weeks is almost up which is why the rush as I just mentioned. I was to have closed by May 9. As you can see a lot needs to happen and a lot can happen. I know that's a lot but I just wanted to share my experience. I've had others tell me they had small issues but went ok. But everyone I've spoken with said there is a lot of paperwork and back and forth with the bank. Just get all your ducks in a row and get things in as quickly as possible. It is hard when you have to rely on others to get requested items in. As you see, none of the above I had control over. And I was told by the loan processor that she was new to this type of loan. Really??!!!?! Feel free to ask anything else. I'll try to be shorter in my response. :)

@Jeremy Seib Sorry for jackin your thread. My bad.

@Brie Schmidt Can you customize the questions? I really don't want to use closed ended questions. (Do you have pets? Do you smoke?)

Brianna Schmidt Why do you use SmartMove rather than rentapplication.net for the background and eviction checks? Also, I've read many posts that suggest asking open ended questions, for instance, "How many evictions have you had?" rather than closed ended "Have you ever been evicted?" How do you get around the latter question on the rentapp? (Not sure why posting from my phone makes several posts)

Brianna Schmidt Why do you use SmartMove rather than rentapplication.net for the background and eviction checks?

@William Newman Welcome! Look forward to meeting.

@Aaron Montague Thanks. I'm sorry I should've mentioned that I'm nearing close. I've had issues finding contractors that were either willing, capable of or able to meet my budget for the 203k process.

Thanks for your quick responses.

@Aaron Montague That was my thinking actually. Just wondering if anyone saw it from another angle that I haven't looked at.

Thanks.

Sorry I can't delete duplicate post.

I'm purchasing a 2 unit that I will owner occupy (OO) for the first year. Expected rent $2300 fully rented.

Question is, should I budget as though it will be fully rented or the actual rent for that year? For example: vacancy $230/mo (10% of $2300 fully rented) or $115/mo (10% of $1150 actual rent). When I calculated my numbers before purchase I was looking at about $500-$600 cash flow fully rented (self managed). The rent for one unit would just about cover the mortgage save for about $100. (P.S. I'm not asking about the vacancy rate for my market).

Thanks in advance.

Sorry I clicked Post before I finished the title. Owner Occupied - How should I calculate expenses?

I'm purchasing a 2 unit that I will owner occupy (OO) for the first year. Expected rent $2300 fully rented.

Question is, should I budget as though it will be fully rented or the actual rent for that year? For example: vacancy $230/mo (10% of $2300 fully rented) or $115/mo (10% of $1150 actual rent). When I calculated my numbers before purchase I was looking at about $500-$600 cash flow fully rented (self managed). The rent for one unit would just about cover the mortgage save for about $100. (P.S. I'm not asking about the vacancy rate for my market).

Thanks in advance.