All Forum Posts by: Matthew Porcaro

Your issue here with doing something like an FHA or conventional financing is your loan limits in the area. In the highest COL areas of the country, you don't see FHA going much higher than $1.5M, and that's for a 4-plex.

You might need to look into more private banks or HML's that can give you a customized loan plan.

One issue to is the lack of comps. Lenders are going to need to see comps that support your valuation, and unless you can bring them something solid (depending on the bank) they will be weary of writing the loan. 

If the seller is willing to accept seller financing, why don't you just stick with that?

@Drew Harris

As long as it’s code compliant in your jurisdiction that should be no problem.

@Stanley Tong

Thanks Scott!

Hey Stanley - this situation would be perfect for a 203k loan. I actually did the exact thing you’re trying to do a few years back. It’s what started my investing career.

First thing you need to do is secure an experienced renovation loan lender. There are a few ways to do this. One of them is to lookup the 203k endorsement summary on Google.

Go to the first site (HUD website) and scroll down to the bottom to get the most recent month and year.

This will give you a list of lenders and how many 203k loans they’ve done this month and this year. Scan through to find Dallas and make a list of lenders.

Give them all a call and see who is the head of reno lending in their departments in your city.

That should be enough to get you a good start.

The lender is the quarterback for these loans. One that’s experienced will help you stay the path, as it does have some extra nuance.

But overall, it’s extremely powerful when used correctly.

Let me know if you have any other questions!

@Connor Seymour

Hey Connor, it’s great that you’re already saving for your future!

One thing to consider with some of these bank loans, FHA or 203k specifically, they're going to be looking for 2 years of stable income from your career, so depending on your resume, that could deter you a bit.

You can always get a co-signer or a partner to cover for that.

Either way, keep saving and maybe find some investors in your market and see how you can help them.

Exposure is going to be the best thing for you at 18.

Best of luck bro!

Matt

@Brad Sneckner

The reason I brought it up is it’s a very common misconception that holds people back.

Any licensed, bonded, and insured contractor can qualify.

You would want that all anyway, for my flips everyone I use is licensed and insured. Never worth saving a few bucks and taking the risk.

These requirements are in place not only for the lender but for the borrower.

To many people use crap contractors and they get allured by cheap prices and end up having them walk off the job or fail to complete it because they ran out of funds.

@Brad Sneckner

What’s an approved contractor?

I'm really sorry to hear that man, there's just a dropped ball on a couple of things, but I would definitely get a lawyer involved ASAP. 

As for the 203k consultant releasing funds for a project that wasn't completed, you can report that consultant to the HOC. https://www.hud.gov/program_of...

Let them know the situation that there was some shady dealings, and you could technically go after the 203k consultant as well. 

Just make sure you have pictures and proof of everything. 

Also, not to pick on ya, but never just take the 203k consultant's word for it. You definitely need boots on the ground and to see the work yourself throughout the process.

The unfortunate reality is even though this person is supposed to be checking, ultimately no one cares about the project as much as you do, and sometimes if you want things done right you need to take it into your own hands. 

I was at every 203k draw inspection for this reason.

That said, you live and learn, and hopefully it was towards the end of the project, but I think you definitely have some grounds for legal cases against both parties. 

Best of luck man!

The caveat to the non-owner occupied HomeStyle loan is that it can only be a single family, that's why I asked. Sorry, should have clarified. 

With some other properties under your belt, it might be worth pitching this deal to a bunch of smaller banks and credit unions. If you pitch it right, many avid bankers would be willing to work out a customized mortgage offer for you!

@Jacob Lapp

Is the next deal a multi as well?

You could potentially do a HomeStyle instead. It’ll require 15% down payment instead of 3.5%, but you won’t have to occupy it.

You still get to wrap in reno costs into the loan as well!

Great question! Your residency starts as soon as you purchase, even though you might not be physically living there. It's your primary main residence, whether you occupy or not. 

Hope that clarifies!