Real Estate Zealot

FHA 203 (k) Renovation Loans for Fix-Up Properties

In this video from BrokerIPTV.com, renovation loan specialist Tom Yoswa from MyProspectMortgage.com discusses FHA 203 (k) loans, which can assist buyers with fix-up properties.

Interviewer: Today we are talking with Tom Yoswa. He is a renovation loan specialist. How are you?

Tom Yoswa: Hi Dan. I am doing well.

Interviewer: Well we talked in a segment about what a residential loan or renovation loan specialist does, can you explain it again?

Tom Yoswa: Well, basically, I loan people money to purchase and renovate a house. You know, what I find in the market that we are in right now, there is a lot of bank foreclosures, there is a lot of HUD properties, those properties in particular, you know, a lot of them, if you show me one that doesn't need work I will show you 10 of them that probably do. So basically it enables you to take those homes, buy them and fix them all with one loan and one close.

Interviewer: And most realtors and consumers would probably know this is an FHA 203(k) loan, is that right?

Tom Yoswa: Yes.

Interviewer: Okay, yeah.

Tom Yoswa: It's basically nothing more than a regular FHA loan with the same FHA guidelines. However, there is a construction element to it and we put the money into Escrow afterwards for the repairs.

Interviewer: And traditionally what type of buyers are using this loan and what's that price point?

Tom Yoswa: Well I mean in this market right now there is a lot of first time home buyers. You know I think there are some statistics out there say you know almost 50% of all home buyers right now are first timers, which makes sense because of the market and the interest rates, etcetera. So you know, when I look at first time home buyers most of them are not buying you know $300,000 houses, they are buying $150,000 houses and you know, the large majority of those homes need some sort of work.

Interviewer: Right.

Tom Yoswa: Carpet, kitchens, bathrooms, new roofs, etcetera.

Interviewer: So a $100,000 will say what 220, 225 is pretty much the pool you are swimming in?

Tom Yoswa: I would say for the most part I mean there are other, you know, it can go higher, it can go lower, it just really depends on who the buyer is and what they are looking at.

Interviewer: And what type of repairs can they make under this program?

Tom Yoswa: Dan, you can do just about anything, you know carpet, paint, kitchens, bathrooms are usually the typical ones. People don't know you can put appliances into the loans, if it has a furnace or any of the HVAC stuff that isn't functioning, you can do that.

Interviewer: Hot water heating?

Tom Yoswa: All that stuff,...

Interviewer: Roofs?

Tom Yoswa: Roofs, you can do it, obviously anything exterior, landscaping in some situations, etcetera.

Interviewer: All right, a couple the obstacles that prevent people from buying a house. One is usually down payment, how much money do they have to put down with this loan?

Tom Yoswa: Well I mean, there is again, options there, too. I do conventional as well as FHA, it's the same guidelines as FHA and conventional. So with the 203(k) loan, it's, you know, as little as three and a half percent down.

Interviewer: Okay.

Tom Yoswa: So you know whatever the purchase plus the renovation is combined, it's three and a half per cent off of that, but there are other programs, HUD has a $100 down program if it still exists, I think it does.

Interviewer: Yeah.

Tom Yoswa: And you can use that in certain situations, so it really depends but it's as little as three and a half percent down.

Interviewer: So one of the questions I know I have been asked by buyers is can you combine the programs? I want to do the $100 down HUD program, but I need the construction financing. Can you do it?

Tom Yoswa: I have done it, just so long as it's a full-price offer.

Interviewer: Oh, it's got to be full-price offer?

Tom Yoswa: It's got to be a full-price offer. So if HUD's asking 160, you bid 156, no-go. If you bid, if it's 160, you bid 160, then yes, and then again, I am not 100% sure. I believe the program is still there.

Interviewer: It sounds good. Tom, thanks I appreciate it.

Tom Yoswa: Thank you very much, Dan.

You can reach Tom Yoswa at 303-668-4499 and at MyProspectMortgage.com online.

Renovation Loan Specialist Tom Yoswa

Tom Yoswa is a renovation loan specialist at My Prospect Mortgage. He talks about how to obtain these loans in this BrokerIPTV.com video.

Interviewer: Today we are talking with Tom Yoswa. He is a renovation loan specialist. Tell me about how do you get a renovation loan and what is it exactly?

Tom Yoswa: Well basically it's like any other loan that you are going to qualify for, the difference being is that we are going to loan you the money to purchase and renovate a house and we are going to do it all with one loan and one close.

Interviewer: Okay, so there is not a loan to buy the house and then another loan to go get some money to improve it?

Tom Yoswa: No.

Interviewer: It's all lumped in one?

Tom Yoswa: It's all put into one loan.

Interviewer: And who is it offered by?

Tom Yoswa: Well there is, there is probably several lenders that do it, but there are very few that really specialize in it.

Interviewer: And it's primarily done through FHA, correct?

Tom Yoswa: FHA... there is a conventional product but right now probably 80% of my loans are FHA.

Interviewer: And it's called the 203(k) loan through FHA, right?

Tom Yoswa: 203(k) loan, yep.

Interviewer: And explain how that works?

Tom Yoswa: Well basically you know, you have someone that wants to buy a house, maybe it's a bank foreclosure or something like that, where they might need a new kitchen new flooring, new roof, new windows, it can be just about anything, and what we are going to do is basically loan them the money to purchase, you know, they get it under contract and then there is an Escrow that we set up post-close from which they draw from to do the fix-ups in the house.

Interviewer: And how do you determine how much they get to use to fix it up?

Tom Yoswa: Well a lot of times it just depends on, you know, what the issues are with the house lot of things we have an inspection that's done. The Home Inspector might go in and have a whole laundry list of things that need to be done, other times they might just have two or three things and it's a simple one, so really it just kind of depends on the house.

Interviewer: So do you know, going in ahead of time before you give the loan, how much work of repair needs to be done?

Tom Yoswa: Yes, yes, that's the key is there before we close the loan we have a work with Escrow or a bid from a contractor and then we close the loan based on that bid and my appraisal is done with that bid in mind, subject to the repairs that are being made.

Interviewer: And then after they close, do they have to use that contractor?

Tom Yoswa: Pretty much. I mean, many times we have already got somebody in line, but you know there are people who want to change after the fact but typically they use the same contractor.

Interviewer: Right now after the close deals you just hand the customer a check, how do they get the money?

Tom Yoswa: No and that's not necessarily how it works I mean to kind of protect the customer against their contractor we put their money into an Escrow account.

Interviewer: Right.

Tom Yoswa: And then they draw money out of the Escrow account for the repair. So, that lot of times there is an Inspector involved and things like that.

Interviewer: So if I am reading you correctly, let's say some repairs were done, the contractor submits the bill to the bank, who is holding the Escrow account.

Tom Yoswa: Yeah.

Interviewer: The bank then cuts the check to the contractor for the repairs you did?

Tom Yoswa: More or less, yeah there is a draw process and there is photos that have to be taken, you know things have changed a little bit over the last few years so...

Interviewer: More work?

Tom Yoswa: Yeah, so you know it's a little bit more intensive than just that but you know there are forms, they fill it in, they get their money within 72 hours.

Interviewer: What benefit is this to realtors?

Tom Yoswa: Well I mean the realtors you know, it's a whole different animal for them because it's another notch in their belt I would like to say. It's a product that lot of them don't know about. So if you are a realtor and you have got a listing that is in need of repair and you know it's in need of repair, maybe it was a house and it hasn't been, you know, it's cosmetically challenged, hasn't been touched in 30 years.

Interviewer: Yeah.

Tom Yoswa: It's a way to maybe you know put it into their listing or into the MLS. In other ways it's beneficial because the customers that they are working with, they know about this loan and if they find a house that needs repair then they have, they know about the loan and you know we go from there.

Interviewer: So instead of a buyer walking in and walking out after they see the place, they go, whoa, wait there is money that can be set aside to fix this in your loan?

Tom Yoswa: That's exactly what I do and it's exactly the way that I present it to realtors.

Interviewer: Tom, thanks, great information. I appreciate it.

Tom Yoswa: Thanks, Dan.

You can reach Tom at 303-668-4499 and at MyProspectMortgage.com online.

Ken Holbert discusses EPA Renovation, Repair and Painting Rule Exclusions and Certification

Interviewer: Welcome to Broker IPTV. Im here today with Ken Holbert and Ken is with Safe Objectives Inc. And Ken, welcome to the show.

Ken Holbert: Thank you for having me, Mark.

Interviewer: Hey, in a previous edition we were talking about properties that do qualify now for this EPA RRP, which is the Renovate, Repair and Paint guideline coming to into effect on April 22nd. Tell me about some of the houses that are excluded from this or, or is my house excluded from it as an owner?

Ken Holbert: If your house is built after 1978, its excluded.

Interviewer: So '78 is the big guideline?

Ken Holbert: No '77 is the big guideline. If its built during '78 or after, its excluded.

Interviewer: Right, okay.

Ken Holbert: But if it was built prior to 1978, its in the rule.

Interviewer: All right, other properties are excluded.

Ken Holbert: Home owner doing their own repair.

Interviewer: So I can do all I want, be as hazardous as I want.

Ken Holbert: In their own home.

Interviewer: If I want to chip off lead-based paint, eat it, breathe it, smell it thats my deal right?

Ken Holbert: Then also the excluded is if you are doing minor repair maintenance under six square feet of, six square feet or less of disturbance inside a room, 20 square feet on the exterior, or, but there is an exclusion to that. If you are doing window replacement, demolition or using a perimeter work practice by EPA or HUD, you must use, this covers it.

Interviewer: Right, I guess.

Ken Holbert: And window replacement doesnt matter if its a one inch by one inch window, you are doing safe work practices.

Interviewer: So the bottom line is window contractors coming into my home are all going to have to comply with this?

Ken Holbert: Yes sir.

Interviewer: If the house tests out for, now do, what if, what if I dont know if my house has lead-based paint in it or not, whats the, whats the vendor going to assume?

Ken Holbert: Vendor must assume there is lead until a test has been done to either qualify or disqualify the house.

Interviewer: So window guy is going to go out and check the date of my house and if I come out there and I wont tell him if there is lead-based paint.

Ken Holbert: He has to assume its there and work with lead-safe work practices and build appropriately.

Interviewer: So what does it take, for a vendor to be EPA certified under these new RRP guidelines?

Ken Holbert: They have to, the vendor or the firm has to submit to EPA and become a firm. Its generally about 300 dollars. Then they must assign a renovator, which is an eight-hour course to go to the work site and be the supervisor of the job site.

Interviewer: So its an eight-hour course that they attend to become certified with the EPA?

Ken Holbert: For the individual, the company just sends an application to the EPA.

Interviewer: So company sends the money and the workers have to become certified?

Ken Holbert: Yes.

Interviewer: What about training for realtors? I know you told me earlier that you have actually had some realtors and appraisers attend your eight-hour course. What about your four-hour course? Is that something you recommend for real estate agents?

Ken Holbert: We do because that way they can come in and they can get a better understanding what the role is, see how its going to affect their business, see what they need to tell their potential clients.

Interviewer: Right.

Ken Holbert: So they dont, you know, come back blind side and say, well I didnt know about that at the end of the sale, they know about it before hand and they can inform their clients beforehand.

Interviewer: Yeah they, so we are really taking a, they are really escalating or taking a step up here on the, before we just did the lead-based paint no one ever knew about paint, no one had any paint testing done, you give them the booklet we are all done.

Ken Holbert: Yep.

Interviewer: Now its changing.

Ken Holbert: Now its changing to where you sell the property you have to disclose you have had tests. Well, if you dont disclose the work thats going to be done on the property you just sold will have to be assumed that there is lead-based paint.

Interviewer: Right.

Ken Holbert: And we are probably going to say it was you can go back do your window replacement doesnt matter or anything like that, now it does matter.

Interviewer: Interesting, you have got a website, Ken, you can send people to?

Ken Holbert: www.safeobjectives.com.

Interviewer: Great, well Ken, excellent information. Thanks for being on the show.

Ken Holbert: Thank you.

On April 22, New EPA Renovation, Repair and Painting Rule Takes Effect

Interviewer: Welcome to Broker IPTV. Im here today with Ken Holbert and Ken is with Safe Objectives, Inc. Welcome to the show, Ken.

Ken Holbert: Thanks for having me.

Interviewer: In a previous conversation, we were talking about a new legislative item thats coming into, or propagating into, full force. Why dont you tell us about that?

Ken Holbert: Its the new Renovation, Repair and Painting Rule. What it encompasses is, April 22nd 2010, all firms working on target housing must be approved or accredited by EPA, and all renovators, a renovator, should be assigned by each company.

Interviewer: So now, being in real estate this is, what, what its like the feds are just throwing another thing in for us to look out here for and you are saying that this is called the RRP, which stands for renovate, repair and paint?

Ken Holbert: Yes.

Interviewer: And its an EPA compliance standard?

Ken Holbert: Yes sir.

Interviewer: Actually signed into law you said that back in 2008?

Ken Holbert: April 22nd 2008.

Interviewer: And coming into full force here, I dont think a lot of realtors are really aware April 22nd 2010.

Ken Holbert: No.

Interviewer: So tell me, what type of properties qualify for this RRP?

Ken Holbert: Target housing, which is any home that was built prior to 1978.

Interviewer: Okay prior, just like our old lead-based paint.

Ken Holbert: Yeah, but instead it excludes two things: one zero bedroom, or homes built specifically for the elderly or disabled that no child under the age or six resides at or is expected to reside at. Like elderly homes, you know, to say.

Interviewer: Senior homes?

Ken Holbert: Senior homes.

Interviewer: I see, senior homes and homes you said where there are...?

Ken Holbert: No child under the age of six as long as its under that senior home, no child under the age of six resides at or is expected to reside at.

Interviewer: Okay. And so other qualifying things anything prior to 1978, so tell me how what are we talking about here a whole room all the trim work what, what qualifies for this new RRP?

Ken Holbert: What it qualifies is when you are dealing with any component that has as lead-based paint on it and you can be dealing with several components. If you are disturbing a painted surface within a room of up to, or more than, six square feet, its covered by the rule. If you are disturbing less than six square feet, it is not. On the outside of the building its 20 square feet for the entire building.

Interviewer: For the entire building. So, if you are painting the house that you are going to have to probably work with an RRP-certified vendor?

Ken Holbert: Yes if you are doing any form of disturbing like sanding, scraping or anything like that to get it prepared for it.

Interviewer: All right, so flip properties--we buy a lot of flip properties and work with a lot of investors. You told me an interesting stat: 1940 it just guaranteed based on a HUD study about 85% of all the homes are going to have some type of lead-based paint.

Ken Holbert: Yeah that was then back in October 2008 by HUD and what they said was about 42 million homes in the United States contain lead-based paint and about 86% of those built prior to 1940 was 85% was lead-based paint. Between 1940 and 1969, 65% of the homes contained lead-based paint.

Interviewer: So bottom line is here April 22 for working with people that are buying older homes pre-1978. I think that lead-based paint testing and stuff is going to come a lot more into play now.

Ken Holbert: Yeah the, with the new rule coming out, a renovator or a company working and disturbing more than that six square feet must assume all components are lead-based paint unless they have it tested.

Interviewer: Right, so you just cant say, hey I dont know if this house has lead-based paint.

Ken Holbert: There is no longer that exclusion of you dont know you dont care. Now its if you dont know you are forced to assume.

Interviewer: Right. Well, hey Ken, great information, appreciate you being on the show today.

Ken Holbert: Glad I could be here.

Quality, Versatility And Design Are Key To Denver Custom Home Success

Broker IPTV: Today we are talking with Jon Crabtree from Frontgate Development Group and Jon you are medium to small builder, what would you say?


Jon Crabtree: I would say pretty smaller actually. We try to only do a few a years to keep the quality. I like to be there everyday and kind of keep my hand on the quality, I think that important to us, as well as changes in just every little detail, I like to be there for.


Broker IPTV: I want to talk about consumers in this segment. What do you here from consumers and what they want form a home?


Jon Crabtree: I think that they want the moon now-a-days, which I can understand. Again there is a lot of poor quality out there. So, what they wanting is versatility, a lot of people want flexible spaces, they want to, like I said we are put in elevator shafts roughing them in, so as they age, I think they can put elevator in. Now, they do not want the elevated today, but may be in 10 - 20 years, they will, so we are looking for versatility and flexibility, for sure.


Jon Crabtree: Do you solicit feedback form realtors on your designs?


Jon Crabtree: Always, yeah as many people as possible, other builders. I pretty much like people to come though, neighbors, I know the lot of people have that hold "don't steal my idea thing," but I feel like the ideas always have to keep coming and keep evolving, so I get stagnant by trying to hide it. So, I like everybody telling me what their feedback is and so I can change and adapt.


Broker IPTV: Is there such thing as they perfect design for today's family?


Jon Crabtree: I don't know. I am trying my best. We are getting as close as we can and I think every time it gets better, but every fine families definitely different, but I think quite a few of us have it now, having a little bit.


Broker IPTV: Do not worry, because when they ask that question a Frank Lloyd Wright. They said out of everything you have ever design, what has been your best, and he says "my next one."


Jon Crabtree: Yeah, exactly. I feel you are always trying a little bit better and they do get better every time.


Broker IPTV: Is there a signature that is visible in a FrontGate custom home?


Jon Crabtree: I just think quality, I honestly, a lot of people like some of our basements and I think that's one of the things that sets apart. It is our basements are really a good part of house and though through when we started, but I would just say the quality in general, because we like to mix up our styles not repeat very much.


Broker IPTV: Give an Internet presence?


Jon Crabtree: We do www.frontgatecustomhomes.com.


Broker IPTV: And do you derive sales from that you think?


Jon Crabtree: We are starting to. Actually, we just started a new campaign we are spending a little more money on marketing now, that the economy is worse, so as people ramping down, we are trying to ramp up and spend more money that than we had to before. So, that is, we are defiantly trying and it's getting better what we are doing a little right now and I think it is looking elegant, so.


Broker IPTV: Thank you man.


Jon Crabtree: Thank you.


Broker IPTV: Good meeting you.

Frontgate Development Proves "Over The Top" Features Get Homes Sold

Broker IPTV: Today we are talking with Jon Crabtree from the Frontgate Developing Group and Jon thanks for being with us. Always like to talk the builders when we can?


Jon Crabtree: Sure.


Broker IPTV: Where are you building, what houses can we look forward to see?


Jon Crabtree: We are building currently one at 2516 South Madison Street, Observatory Park another one in at, 2490 South Milwaukee Street, and then we have one at 1016 S Clayton Way, as well as a couple of coming in the Observatory Park as well.


Broker IPTV: Is that your main areas where you are focusing these days?


Jon Crabtree: It is.


Broker IPTV: And you like Observatory Park, why?


Jon Crabtree: We like the friendliness of the neighborhoods, we live in the neighborhood and we also that it's the really got close amenities in I-25 access and why get little coffee shops and we surely like that area.


Broker IPTV: I do too. You said to me one of your key is that you don't build average. What does that mean?


Jon Crabtree: Well we try to take a lot of time. If something needs to changed we change it, if we put a lot of times in our plans ahead of times. So, a lot of specifications, a lot of time planning, architecturally, so we spend more money, basically we got to boil down too and have a nicer product.


Broker IPTV: Yeah you do because, I had been through a spec in like for instance, when I went up on the second floor and took at look at some other bathrooms, I no that the builder did go the extra mile in the bathrooms with say granite on the tops, verses some tiles, but you do go that extra mile even on spec.


Jon Crabtree: Yeah. We go essentially as far as we can go on a spec. We will put in floor radiant heat in a basements, we feels like the basements as much part of the houses than any other part of the house. So, I think that is a area we stand out like an 2516 South Madison Street, we are putting in 1700 bottle Wine Cellar we are including that, we are...


Broker IPTV: Then normally doesn't come with the spec with those... we will get that...


Jon Crabtree: Yeah. So, we are really trying to step it up an arch and make it as nice as it can be. We have everything from crystal knobs to one of the finest lines in cabinetry you can put in, both packages and... just trying to make it different, really like a costume that's spec.


Broker IPTV: You talk to the lot of people, whether they be realtors, buyers and seller builders and so forth what are they turn you about that market forecast?


Jon Crabtree: I hear everything that everybody else read everything form good or bad. I am really looking forward to the shortage on the other side of this mortgage crisis and what not going on in the recession ideas that, I hear bad things, but like I said the couple of that is I talk to or encourage that we are thinking it is going to be good and we are going to stand up that much more, so.


Broker IPTV: Jon thanks for being with us, great information, appreciate it.


Jon Crabtree: Thank you.

Kelly Dutton - DirectBuild Lets You Be The Contractor

BrokerIPTV  : Today we are talking with Kelly Dutton Business Development Manager for DirectBuild and thanks for being with us.

Kelly Dutton: Thanks so much.

BrokerIPTV  : What is DirectBuild?

Kelly Dutton: DirectBuild is a turnkey consulting program, basically through DirectBuild, we help people tackle their own general contracting projects. We help people build their own homes whether it would be a custom home, remodel, scrape and new build home make over, and investment related construction projects.

BrokerIPTV  : So I have this correct, you help me be my own General Manager?

Kelly Dutton: Yes, we do.

BrokerIPTV  : So to speak.

Kelly Dutton: Yes.

BrokerIPTV  : Gottcha. Why this concept?

Kelly Dutton: This concept was really born out of our sister company InVision Homes. For InVision Homes, we have a lot of past clients come back to us, that really wanted our help, the builder expertise, but they really wanted to tackle more of the work themselves. I think the reason why we are seeing this need is out of people visiting the Home Depots and some of the "Do it yourself" companies out there with the web and HGTV people are really starting to realize that they can tackle some of these projects themselves, they want to save a little bit of money and be able to do it their own.

BrokerIPTV  : Kelly, what type of cost savings are we looking at?

Kelly Dutton: Significant cost savings. The way we are able to save our clients money is simply that we help put them in front of companies that we actually have volume building accounts with, that will enable them to go and secure much better pricing on their material and supplies and on labor. So over all typically our clients, when they are all done with the project can get in for about 10 - 15 % less.

BrokerIPTV  : Less. Great concept I think, I have heard you talk about franchising this idea, is that right?

Kelly Dutton: Yes.

BrokerIPTV  : What are those plans?

Kelly Dutton: We are currently franchising our company taking it nation wide. We have got a Northern Colorado office opened right now and we are talking with several people that are looking to open up their own DirectBuild franchising in Colorado and several other states.

BrokerIPTV  : All right, how do people get more info about that?

Kelly Dutton: Best way to get the initial information would be to go to our website, which is www.directbuildusa.com or they can contact us directly at 303-805-9294.

BrokerIPTV  : There you have it, Thank you.

Kelly Dutton: Thank you so much. I appreciate it.

BrokerIPTV  : Great talking with you and appreciate it.