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