I get such a kick out of people who say they are "investors" as I use-ta was one. I must hear someone each week that says they just pay all cash then fix them up all cash and do one at a time, over and over again.
I guess in their eyes that makes them an investor. If they leveraged their investment just a little they might be able to do four at a time with the same amount of money. The power of OPM (other people's money) can rocket a small investor into an entirely different world of investment.
Don't get me wrong, the small investor has their place and if that is what they want, they should do that just the way they are doing it. But I don't look at them as an "investor" just a person who buys a second home and fixes it up. They may do 1-2 per year and maintain their "other job", the one that pays the bills. The "investor" part of their life is for play money. That means they are whatever they do at the other job and a "part time investor".
When I think of investors or developers I see that as their full time job, their livelihood. I have met a few of those young entrepreneurs recently and it is such a different mental. I met two recently and it turns out they knew each other, one referred the other to us.
Both purchased their personal homes with renovation loans and the second one just couldn't stand to see that vacant lot two doors down from his home and purchased it. Finished his home and when I drove by the vacant lot a few days ago there is a home about 40% complete, yahoo. Now that is an "investor". These young investors have anywhere from 5-15 homes going at any one time. Holy Cow, to be young again.
The HomeStyle Renovation loan program is designed for second homes and investors. We have no less than three different lenders who specialize in these loans and you guessed it "NO PMI" like the FHA 203k loan has. You get the money to purchase and renovate the home all in one 30-year fixed rate loan.
These loans work just like the FHA 203k without the additional expense of PMI (private mortgage insurance) which at some of the loan amounts we see can be substantial. If your credit is good and you have some money in the bank you may be better off with this renovation loan over the 203k.
-Mike Young, 203k Team Leader