Renovation financing The Power Is Now 10 23 2014

Agent Training How to use Renovation Financing as a tool to do more business Skip Schenker

Ready4Remodel.com 800-385-3503

Close “AS-IS” On any residential property In any condition with a Renovation Loan* *Some Exceptions

 The FHA 203(k) Renovation

Loans make Your job easier…

All repairs are financed into the buyers loan and all work is completed AFTER the transaction closes…

 The FHA 203(k) Renovation

Loans make Your job easier…

The Appraisal is completed based on the hypothetical assumption that all of the repairs are completed.

“As-Repaired” Appraisal

The FHA 203(k) Renovation Loans make Your job easier…

Do you see houses that looks like this?

What is an FHA 203(k) loan?

What is an FHA 203(k)? o It is a gift for the buyer to create the home they want o A gift to satisfy all of the deficiencies 

(code violations, kitchen, roof, windows, termite, etc…)

o It gives the buyer everything they want, that the home

currently does not have

o A gift of new paint, carpet, windows, granite

countertops, doors & appliances, etc…

o Energy Saving Improvements – GREEN HOME.

Energy Efficient Mortgage.

Turn this‌

Into this‌

Close “As-Is”

Short Sales?

Most Entry Level Buyers Close Broke o Home Depot Credit Cards are 22% - 30% o The minimum payment on a $8,000 credit card bill

is about $200.00 o The payment on $30,000 additional money in their

mortgage payment is about $200.00 Renovation Loans Create Sustainable Homeownership

Benefits of Renovation Financing o The property will close “As-Is” o No repairs needed to close. o No Termite completion… OK o No Kitchen… OK o No Bathroom… OK o Cracked Slab… OK o Fire Damaged…OK o Well & Septic work needed… OK o Code Violations… OK

Why would FHA Insure a loan on a distressed property? o All deficiencies and improvements are itemized on a

report from a trusted source o A licensed contractor has agreed to do the work on

the report for a specified price o The buyer qualifies for a loan which includes the

purchase price & the cost for the improvements

Closed “As-Is”

Appraised “As-Repaired”

The Appraiser wears ROSE colored glasses

Loan Amount is based off the Acquisition Price‌

The Down Payment is 3.5% of the Acquisition Price

Sample Transaction Purchase Price: Renovation Acct.: Acquisition Cost: Down Payment (3.5%) Loan Amount (96.5%)

$150,000 $ 40,000 $190,000 $ 6,650 $183,350

House must appraise for $172,750 “As-Repaired” FHA Insures up to 110% of the Repaired Value 172,750 X 110% = $190,025

40% of all FHA 203(k) Transactions Fail Why?

 The evolution of a typical

failed 203(k) transaction

Failure Hurts

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I am not the inventor of renovation loans‌ I’m the innovator that simplified a complicated process

2013 National Catalyst Giant of Innovation Recognized for reordering the FHA 203(k) process to minimize fall-out and speed up contract-to-closing timeline

HousingWire Magazine Giant of Innovation (2012) Top 50 Real Estate Tech Solutions Company (2013)

Failure occurs when an offer is accepted without a legitimate repair estimate and the actual repair cost is unknown to the buyers‌  When the buyer is pre-approved for the correct loan amount which includes the repair cost, the success rate is over 90%.

A Ready4Remodel home is…  Pre-Inspected All mandatory FHA health & safety repairs are identified and cost estimated.

 Virtually Staged Helps the buyer visualize what the home “Could” look like all fixed up.

 With a Pre-Approved Renovation loan in place Buyer knows the down payment and monthly payment before the offer is made.

Pre-Inspected by an approved HUD Consultant

Contractor Bid – Silver Package (Mandatory Health & Safety Repairs)

Lender prepares the Financial Options Flyer

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Taking the HURT out of selling distressed properties  Pre-Inspected – To eliminate surprises at the 11th hour  Virtually Staged – Help the buyer VISUALIZE what

the home could look like  Pre-Approved Renovation Loan in Place – Buyer is

approved for the correct loan amount before the property goes under contract

Taking the HURT out of selling distressed properties  Pre-Inspected – To eliminate surprises at the 11th hour  Virtually Staged – Help the buyer VISUALIZE what

the home could look like  Pre-Approved Renovation Loan in Place – Buyer is

approved for the correct loan amount before the property goes under contract

Maximize the Sales Price  List price is based on the “Repaired Value” less the

Repair costs.  The development cost and profit is kept with the

selling entity NOT the cash buyer.  Increase the return to the seller by 10% – 20%

Building Teams in distressed markets  Teams are trained the “Ready4Remodel” marketing

strategy  Training at RLI University  Teams Consist of:  Realtors  Lenders  Contractors  HUD Consultant

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FHA 203(k) Ready4Remodel Certification Training www.RLIUniversity.com

Higher Returns Testimonials‌

Win – Win – Win – Win - Win  Attract owner-occupant buyers  Increase returns  Revitalize communities  Stabilize home values  Create sustainable homeownership  Create Jobs  Minimize Fall-Out  Speed up the closing

THANK YOU !

Request a copy of these slides and/or enrollment in “Renovation Financing 101” Email me at: Skip@Ready4Remodel.com Skip Schenker Cell (714) 681-3768

www.Ready4Remodel.com