All Forum Posts by: John Fiastro

I would agree with Chuck Masters. If you are already in Harford County, I would invest there. There are several reasons for this. First, flipping from 30+ miles away can be tough if you have a full time job, especially if this your first flip. Second, Baltimore City property is older and there are a lot of costs on items that you won't encounter in newer Harford County properties, ie plumbing, electric. Replacing galvanized pipe or older electric gets really expensive real quick. I would minimize risk and look for an 80's construction home in Harford count and limit your improvements to generally cosmetic projects.

Looking for a Baltimore area junker/demo guy . Does anyone have somebody they use often?

Looking for a Baltimore area junker.

I am just wrapping up my first flip.  The house looks great! Not one square inch has gone untouched.  I am expecting to pay a stager.  I had a real estate agent come and take a look at the house and he said that he would charge a 5% commission.  For that he will pay for the photographer and the marketing.  I am trying to reconcile the commission rate and how much work is actually necessary to sell the property.  When a house looks great, should I just find a listing service? Or should I go with my 5% agent?

I have a small one bedroom one bath unit in a duplex that's coming up at the end of the month.  The carpet is about 9 years old and has been shampooed for the last time.  It will require replacement.  The house was built in 1951 and has hardwood floors beneath the carpets that could be refinished.  This unit turns over on average every 18 months or so and shampooing the carpet usually costs about $150.  Carpet replacements will cost about a $1000, I figure refinishing will cost about $1500.  I am thinking that the hardwood will rent easier perhaps for a little more too and won't require the regular shampooing between tenants.  Has anyone made this decision before and if so, how did you decide?

Give Chris Fratta at Prime Lending a call.  He does 203k loans and knows how to get loans closed. He is a professional and hustles for his clients.  I can't give his number out, but if you pm me, I can get it to you.

@Juan Rodriguez I purchased my house using a 203k loan in August 2013. I was extremely happy with the purchase and the loan. However, I must admit that there were times during the loan approval process that I wanted to tear my hair out.

If you are new to property investment, than a 203k is a great way to go for several reasons. First,FHA's requirements are there to protect the homebuyer, so there is a method to the madness. Most folks are not familiar with what it takes to renovate/rehab a property, so the FHA system provides a great and safe framework to ensure that it is successful. Because, FHA requires just 3.5% you can be into the property for very little money and remember, the 3.5% is only on the purchase price not the rehab budget.

First, contact your mortgage lender and ask if they can recommend someone that specifically does 203k loans. Some mortgage folks don't do them, because they find it too complicated. I have found that some lenders have carved out a nitch in the market for these loans. The closing process can take a little bit longer, in my case it took about 75 days. Some of that was my fault though.

Once under contract, your lender will assign you a consultant. The consultant will walk the property with you and assemble a list of all the projects you wish to have completed. They can include bathrooms, kitchens, roof, etc. The consultant will provide you with a bid sheet for your contractors and one for you to see his estimated project costs. The contractors bid sheet is left blank and they can fill it in to make the bid.

The next step is to find a contractor. I remember having to get bids from three different contractors. I selected one and submitted the contractor's bid sheet to the mortgage lender.

At this point, the lender underwrites the entire loan both purchase and renovation price. Be prepared for numerous requests for documents.

After the property settles and becomes yours you have 6 months to finish the property. The contractor must start work, but does not take draws until the consultant comes back and inspects the work. There are 5 available draws. Both the borrower and the consultant must sign off on the work in order for the contractor to get their check.

In my case, I bought a 2 bed, 1.5 bath and went through the process. The property was under contract in mid-June 2013 and I settled on the property at the very end of August. The contractor started working in October and was finished by the end of January.

I purchased the property for $80k put in about $55k in rehab, which in retrospect was a little on the high side. Recently, I refinanced out of the FHA loan and lowered my monthly payment by eliminating my mortgage insurance, because now i have about $30k+ in equity. You can sell the house after 1 year from purchase.

The 203k loan is an incredible opportunity to buy a house and fix it up to your own taste with the banks money and with safeguards in place to protect you if this is your first rehab.

I would highly recommend it. 

@Chris Jackson, the 75 days was between contract acceptance and settlement. Because settlement was on August 31, I did not make a September payment. You are required to make payments before the project is done, so I did make an October, November, December, January payments without actually living in the property. The house was SFH, so I can't quite say in what order the contractor would do renovations on a on a multi-family. However, it would make sense if they were done all at one time.

While you may not be able to wait 4 months, I would argue that you are going to pay for those 4 months one way or another.  If you defer the units' improvements, you'll have to do it again with cash later on between tenants.  Biting the bullet early on by improving all of the units will give you 3 hassle free units in addition to yours. 

Remember, my rehab time was my rehab time.  Your project may not last 4 months.  It may last 2 months. Part of my delay was that my contractor couldn't get to the property until October about 45 days after I had purchased the property.

I would speak to your 203k specialist and get as many answers as you can.  The 203k can be intensive but worth it.  However, for a first time property and renovation project, I would highly recommend it.

@Chris Jackson I purchased my house using a  203k loan in August 2013.  I was extremely happy with the purchase and the loan.  However, I must admit that there were times during the loan approval process that I wanted to tear my hair out.   

If you are new to property investment, than a 203k is a great way to go for several reasons. First, FHA's requirements are there to protect the homebuyer, so there is a method to the madness. Most folks are not familiar with what it takes to renovate/rehab a property, so the FHA system provides a great and safe framework to ensure that it is successful. Because, FHA requires just 3.5% you can be into the property for very little money and remember, the 3.5% is only on the purchase price not the rehab budget.

First, contact your mortgage lender and ask if they can recommend someone that specifically does 203k loans.  Some mortgage folks don't do them, because they find it too complicated.  I have found that some lenders have carved out a  nitch in the market for these loans.   The closing process can take a little bit longer, in my case it took about 75 days.  Some of that was my fault though.

Once under contract, your lender will assign you a consultant.  The consultant will walk the property with you and assemble a list of all the projects you wish to have completed.  They can include bathrooms, kitchens, roof, etc.  The consultant will provide you with a bid sheet for your contractors and one for you to see his estimated project costs.  The contractors bid sheet is left blank and they can fill it in to make the bid.

The next step is to find a contractor.  I remember having to get bids from three different contractors.  I selected one and submitted the contractor's bid sheet to the mortgage lender.

At this point, the lender underwrites the entire loan both purchase and renovation price.  Be prepared for numerous requests for documents.

After the property settles and becomes yours you have 6 months to finish the property.  The contractor must start work, but does not take draws until the consultant comes back and inspects the work.  There are 5 available draws.  Both the borrower and the consultant must sign off on the work in order for the contractor to get their check.

In my case, I bought a 2 bed, 1.5 bath and went through the process.  The property was under contract in mid-June 2013 and I settled on the property at the very end of August. The contractor started working in October and was finished by the end of January.   

I purchased the property for $80k put in about $55k in rehab, which in retrospect was a little on the high side. Recently, I refinanced out of the FHA loan and lowered my monthly payment by eliminating my mortgage insurance, because now i have about $30k+ in equity. You can sell the house after 1 year from purchase.

The 203k loan is an incredible opportunity to buy a house and fix it up to your own taste with the banks money and with safeguards in place to protect you if this is your first rehab.

I would highly recommend it.  

My aunt and uncle live in Ponte Vedra. I love that area and think there's a lot of potential.