All Forum Posts by: Matthew Porcaro

Also, another thing to point out is you cannot do the work yourself on a 203k. You may be able to do it on a streamlined 203k, but I don't believe that's allowed either. You need an approved, licensed, bonded, and insured general contractor to sign off on the work and provide a detail estimate of what needs to be done. 

I may be wrong, but I'm fairly certain that you cannot get a "business" 203k loan. 203k loans are owner occupied first time home buyer loans. They're strictly governed so that businesses/investors don't use them, since they provide a lot of assistance to first time home buyer types. You also cannot transfer ownership to a business entity with these mortgages (or many other conventional owner occupied mortgages in general).

This deal obviously relies mostly on what you can get it for, what you think market rent is, and how much you will need to pay each month for your mortgage payment. 203k monthly payments tend to be high, since you're allowed to put down as little as 3.5% of the purchase price + you need to pay PMI + you are financing the construction cost as well. You will need to sufficient W2 financials to show the bank that you're able to afford the payments.

They can definitely run projections, my lender did it on my refinance before I even had anyone in the property. It is a slippery slope though, there's a lot of proof you need to provide to get past the red tape. 

It really depends on how much equity you have into the property and what it's current appraisal value is. 

Do you own it free and clear? Or did you just finish the rehab? 

Banks will refinance on up to 70% of the appraised value. If you don't have enough equity in the property to allow for that, you may not be eligible. 

Honestly, I have an account dedicated to taking in only rent each month. I don't touch that money. Any "profit" I make on my property is basically held there as a rainy day fun, until it grows large enough to be parlayed into another deal. 

I think your idea is fine, but I don't think you need to use Hard Money if you have the ability to open a 203k. 

Having just finished one myself, I have to say it was tedious but worth every penny if you find a good deal. You have access to any REO listing, and most of those listings now have a "first time buyer" grace period of about 10-20 days where they can only take offers from first time buyers, namely 203k program users. The institution I worked with was M&T and they were more than accommodating. Contractors got paid out fast, inspections were quick, and everyone was happy.

Hard money is tough, especially if you're new. They want a lot of collateral and probably rough terms to start off with, meaning you need to find some dirt cheap properties to get into. Also, to house hack properly, I suggest you finding properties that are already zoned for 2-4 units, unless you want to have a AirBNB type scenario and live with other people in  the same unit. 

Thanks! I will definitely check out TurboTenant!

Hey Guys - what is everyone preferred way of taking rent payment? Only own two units currently, so I don't need a robust system just yet. How should I have my tenants pay me? Up until this point I've just been taking check or cash. 

Just finished mine. The bank was very accommodating, and the HUD consultant was a pleasure to deal with.

The only thing you need to make sure with your contractor is that they are licensed and insured (duh) and that they are able to float the construction costs for the initial start of construction etc. The first payment to the contractor doesn't come until a month after closing. So, if you want to get started ASAP just keep that in mind. Once the HUD consultant does the inspection, I received payment within 5 days via FedEx 2 day.

Hello all, I'm currently finishing up the rehab on a 2-family I picked up last year that I intend to rent out both units for. In the meantime, I've been saving, and I'm looking for suggestions of what my next move should be. I'm 26, live in New York, and I'm getting married at the end of the year. I would like to posture myself well over the next year, and want to know the best way to do it with my available resources. The New York market right now is fiery, and even foreclosures are going for $350k. I would love to continue to do what I just did, but those deals simply don't seem to be out here. Can't find anything that cash flows with a mortgage and taxes on it. The average home in my area has roughly $10k per year in taxes. I've been thinking about looking out of state, but that's obviously intimidating. I could probably even look for smaller apartment buildings out there, but again, that's something I'm not sure is worth the squeeze. I understand this is a pretty open ended question, I just want to get my juices flowing to plan an efficient next step.