All Forum Posts by: Jeff Onofrio

@Rob Beland- my intention is to open open a discussion where I do Q&A at designated time- I do have a full time job ;) but I love to help! 

@Robert P - all lenders have there own contractor package. I will see if I can post mine here for everyone's review.  Once the package is filled out the bid must be detailed and broken down by labor and material.  Any bid that is vague will only waste time as any good underwriter wants detail to protect you and our collateral.  

Hope this helps! 

Your welcome-= virtual beers are always accepted!  LOL

@Rob Beland- anytime.  I wish I had more time to help dispel the myths and misinformation on 203k's.  There is so much of it flying around here on BP.  I love the boards and info but some much is misleading.  

Glad to hear this helps! 

Hi Robert- I am the Director of Renovation Lending at AnnieMac Home Mortgage and I specialize in renovation loans specifically the FHA 203k and Homestyle.  I am going to answer your questions below.  I hope this helps!  

1. Does someone appraise the property before and tell me what work needs to be done in order to use FHA? (that way I know how much to take out in the 203k. (I understand this is SEPARATE from home inspection)- No- you will need to get contractor bids for the work you think needs to be done.  The appraiser will note anything that is missed and does not have the property meeting FHA minimum property standards.  Then you can address those items as well.  I however recommend (not require) the use of a FHA 203k constulatn who can do a feasibility report and save you time.  It will cost you a few hundred dollars but it will help you to get an idea of what you need to do upfront.  

2. Once I figure out what needs to be done (either from an appraiser, or my lender, or google), do I have to go through a legit company? Or just someone who is licensed to make the necessary repairs?  The repairs will need to be done by a licensed contractor with the proper insurance.  As a lender it is our job to make sure the contractor understands how the program works and how they get paid.  We screen them for you but ultimately the choice of who you use is up to you.  

3. Does someone come and inspect all of the work after once it is completed (at least 6 months after) Yes- we will send the appraiser or a fee inspector out to inspect the property.  For a $10K renovation we really would expect it done within 30-45 days- there is no reason it should take any longer.  

4. If someone does come to inspect after, but nobody ever did before, and I find out I need to take out more money, can I restructure the 203k loan, or am I stuck paying out of pocket for additional repairs?  No- once the loan is set it is set.  No changes can be made.  So as I mentioned before a FHA / HUD 203k consultant, while it maybe a small fee it is worth its wait in gold as far as I am concerned.  

Good luck and please feel free to reach out to me with any questions!  I am here to help! 

Info: I am in Massachusetts, looking to spend under 10k and will be using the Streamlined option.

Hello Vera

It sounds like you and your boyfriend have a good strategy in place to help build your portfolio which will ultimately give you long term financial stability. There are a few things that you would need to consider when using FHA financing which can be a deciding factor as to the direction you decide to go. The most important question is your boyfriend currently on the mortgage and/or deed with your home? If so that would create some obstacles and if not using the 203K would be an ideal fit. Whether to buy a single family or a multi-family that is great question and would really depend on your long term and short term goals. In my personal opinion a multi-family home is usually going to give a greater return for there the monthly cash flow to consider and if I was a new investor starting out I would opt to look for a multi-family. That being said it is about the opportunity and if it is the right one its always worth considering. We can certainly help to give you some guidance here if you need it.

If you should have any questions please feel free to give me a call.   

Hello Omiete

One thing that you should consider is marketing the home as a renovation eligible property or something similar. There are loan programs that would allow a potential buyer to buy and close on the property in "As-Is" condition, finance the costs of the renovation and begin the renovation after the loan closes. Loan programs such as the FHA 203K or Fannie Mae Home Style are fantastic options for a property that has suffered fire damage.

Best of luck! 

Hello Adam,

I hope this message finds you well. I noticed that you posted this question about a year and a half ago but I'll give you some feedback from a lender's prospective in case you are still having some issues. When trying to obtain some form of home equity loan the bank will want the home to be 100% complete and safe from health and safety hazards, so there is the chance that you would hit a road block going this route. Where you would have success is through a renovation mortgage such as the FHA 203K or the Fannie Mae HomeStyle. These programs allow for more flexibility with the condition of the home which is what is needed when renovating a property. Both programs lend off of the after-completed value of the property as well, meaning that as a lender we are looking at the value of the home after the repairs are completed not the value of the home in its current condition.

Best of luck to you!

@Helen Kolton - it was not meant to be an attack and I am sorry if it came off that way.  My only reason for saying what I said is because it read as if you were saying that only specific contractors could be used and I wanted to point out that was not the case.  

Its not just one person but misinformation is everywhere with this product and I am just trying to help all of the fellow member's here with the proper info.  

Again I am sorry and meant no disrespect.  

@Helen Kolton - that is completely false. Any contractor can be a 203k contractor. There is no HUD certified list and if you have a HUD consultant on the project then you should be completely fine. That is why I recommend one even on a streamline K as his job is to make sure you are not taken advantage of.

Misinformation is the biggest issue with the 203k.  People do not know how it works and do not know the ins and outs which lends to people making statements such as above which are 100% false.  Please ask a qualified person or know your facts before putting writing something you do not know.  

I am a lender and have lent money on over 250 - 203k's ranging from $2500 in repairs to a 4 unit in NJ at $660,000 in repairs.  I lend all over the country but my main goal is to dispel the myths and misconceptions.  Please feel free to ask me questions.  

Congrats Clay. The FHA 203k is a great program. Some things to think about:

- are you using a bank, correspondent lender or broker?  

- all have pluses and minuses- the biggest is control but secondly all that really matters is experience.  

The HUD consultant is supposed to be picked by the lender, while you can be involved in the process it ultimately is the job of the lender- reason being is there is no oversight or standardization of the reports they provide or the job they do and you want a lender who has relationships with good consultants. The HUD consultant is as big of a part as you, contractor, etc...so this is really important.

Question- how did you come up with the $85K rehab number if you did not have a consultant out yet? The reason I ask is because if you had a contractor give you that number and they missed FHA minimum property standard requirements you might have some more money to add to that number. Just making sure you are covering your bases! Its always good to get a consultant early and do what is called a "feasibility analysis" to see if the property is "feasible" to do a K within your budget.

Good luck and please keep us up to date!