Kickstart Your Week ~ The Renovation Advantage

Quick recap

The meeting began with personal discussions about ages, milestones, and weather conditions between team members before transitioning to a main discussion about renovation mortgages. Charlie shared his 25-year career in mortgage lending, focusing on renovation loans as his niche market, while RenoMan explained the various types of renovation loan options available and the process for success in this specialized area. The conversation concluded with discussions about training, education requirements, and strategies for finding niches in the real estate market, with emphasis on the benefits of renovation loans for both buyers and sellers.

Next steps

  • Ray to discuss with Carrie and Austin about organizing a CE class/workshop on renovation loans with Charlie as the instructor

  • Charlie to share his CE class curriculum with team members who are interested in teaching it in their states

  • Team members to contact Charlie directly for any questions about renovation loans

  • Team members to take the renovation training on Fairway's website, regardless of whether they plan to originate loans themselves

  • Team members to use Fairway's renovation marketing materials and open house flyers when working with renovation loan clients

  • Team members to partner with local HUD consultants for renovation loan projects requiring feasibility reports

  • Team members to identify and build relationships with local contractors who are familiar with renovation loans

  • Team members to use the renovation loan product to help "fatigued buyers" who have been outbid on multiple homes

Summary

Specializing in Renovation Loans

Mike introduced Charlie, who shared his 25-year career in mortgage lending, highlighting his specialization in renovation loans since 2010. Charlie explained that he chose renovation loans as his niche after realizing it was an underserved market, allowing him to differentiate himself from competitors. He emphasized that despite common myths about renovation loans being complex or unpopular, he found success by building strong partnerships and focusing on this specific area.

Renovation Mortgage Process and Timeline

RenoMan explained that renovation mortgages are regular mortgages with additional paperwork and contractor involvement, and emphasized that education is key to overcoming myths and misconceptions. He highlighted Fairway's dedicated renovation mortgage department and their efficient process, noting that their average turn time is 37 days, with some closings taking as little as 19 days. Mike asked about the K, but the conversation ended before RenoMan could elaborate.

Renovation Loan Options Overview

RenoMan explained various renovation loan options beyond the $2-3K FHA loan, including conventional, FHA, VA, and USDA loans, with USDA and VA offering 100% financing. He highlighted that FHA 203K loans allow homes to close in "as-is" condition and can be used to solve appraisal gaps by providing up to 110% of the appraised value. Mike inquired about FHA limits and the use of 203K loans for investment properties, to which RenoMan clarified that conventional renovation products allow for single-family investment properties, while FHA 203K is limited to owner-occupied 1-4 family homes.

Renovation Loan Success Strategies

Mike and RenoMan discussed the process for success in renovation loans, particularly for first-time users or those looking to specialize in this niche. RenoMan emphasized the challenge of finding reliable contractors and explained the steps involved in identifying and collaborating with contractors and consultants. He also highlighted the importance of educating sellers and buyers about renovation loans and the value cushion they offer. RenoMan offered his expertise and support to anyone looking to get into renovation loans, suggesting that local subject matter experts could provide valuable assistance.

Renovation Training and Loan Requirements

RenoMan discussed the company's renovation collateral and website, emphasizing the importance of the renovation training walkthrough for staff. He explained that Fairway does not require a HUD consultant for conventional renovation loans, as they provide in-house oversight and expertise. Mike inquired about continuing education classes for renovation, which Ray agreed was a good idea and said he would discuss with Carrie and Austin.

Real Estate Renovation Loan Strategies

Charlie shared his experience teaching real estate renovation courses approved by state boards of realtors, which can provide credits to agents. He explained that FHA loans cannot be used for renovations on homes without a certificate of occupancy, while conventional loans can be used for substantially completed homes. The group discussed strategies for finding niches in the real estate market, with Charlie emphasizing the potential to attract "fatigued buyers" by showcasing the benefits of renovation loans.

Kickstart Your WeekKimberly BradleyRay Eickhoff, Mike Bendebba