All Forum Posts by: Matthew Porcaro

Sam - I would use a 203k loan for this property, or any property like it. This was the way I did my first "flip" and essentially did a BRRRR. That property now cash flows $2000/mo and I built $130K of equity into it after the rehab.

Yeah, I mean, the money starts to find you when you start doing deals. People take notice, and want a piece. Ultimately, build a relationship with a family office or two. Negotiate hard money guys down after you do a deal or two with them. 

 If you can pull out that much and it won’t strap you, that’s amazing!

You will forever have a liquid cash reserve for any deals that come your way 🙂

 Hi BJ - sorry, haven't been on here in a while. 

To answer this question, yes! This is exactly what I did. I found a legal duplex fannie mae foreclosure, got approved for a 203k, and bought the duplex, rehabbed it, and by the time the rehab was over, I was able to build enough equity in it to refinance out of the 203k, and now I rent both units for a healthy cash flow. 

If you ever have any more questions about this, feel free to PM me. I love talking about how I did it. More people should!

 I personally didn't pull anything out at the end. At the time, all I would have been able to take out was about $15k, which wasn't really worth it for my strategy. 

It's a duplex and it cash flows $2000 per month, and I built a fair amount of equity into the rehab. Right now I'm trying to just accelerate my mortgage pay down to get it paid off in 15 years instead of 30. 

It's good to know it's there if I ever need a HELOC for future deals, but for now I've been fortunate to find financing other ways for flips I've done since.

@Bradley LaBrie

They're not really going to look at how "tidy" your tenants keep it. They're most concerned with most recent CapEx improvements (with receipts to back it), and the rest is just hoping your comps support what you have.

Try to be as polished as you can when you present.

My appraisal after my 203k went pretty well. I just did everything they asked.

Hi Bryan - 

I have not personally used the HomeStyle renovation loan, but I used the 203k on my first BRRRR. I do know the differences between them though.

Overall, the 203k is easier on the borrower. With a 203k you can put down a lower down payment (3.5%) and can have a lower FICO score (580 min). 

The homestyle loan is easier on the rehab and property side. HomeStyle you don't need to live in the property. You also have a higher loan limit, and can wrap "luxury" renovations into the loan (aka, putting in a Sauna or something). The caveat to this is you must have a much better credit score (650+), higher down payment (5% minimum) and a lower Debt to Income ratio than a 203k allows. 

I second the 203k route. As someone who used it for my first flip, I believe with the right guidance, it is the cheapest and best value you can get on your first flip. It also helps to leverage yourself into future deals!

It’s tough, you are buying “as is” however it’s blatantly obvious the seller is purposely hiding structural issues. 

I’m glad you have your lawyer in the loop. This is something that your lawyer needs to counsel you on, and should work out to your favor to some degree, whether it be a concession or return of down payment if you feel it’s a deal killer. 

@Ronnetha Darrett

My first flip was using a 203k. I bought, flipped, and rent out my duplex all using a 203k loan. It’s definitely the best and cheapest way (if you can qualify) to get into real estate investing.

Feel free to PM me with any specific questions. I’m passionate about the subject and would love to help.