The Power of an FHA 203K Loan [REPOST] | Matt Porcaro

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We're back with another episode of the sciencepping Podcast. I have a good friend of mine, someone who has made a massive dent in the universe in real estate investing and just real estate as a whole already at such a young age.
Matt Procaro is here. What's up, bro? What's going on, man? Thanks for having me.
I'm excited about this one. This is going to be something that is so niche relative to what a lot of the guests we talk about real estate investing.
You've not just discovered something, but you've discovered how to make it, I don't know, national, public. You've discovered how to share something that such few amount of people have any amount of knowledge of, including yours truly, which is the 203k loan.
Yes. Yeah.
Real estate's best kept secret as I always call it. Well, damn it.
Let's blow this thing up and let's make sure you are the man. You have the 203k way, which is essentially a program where people can get to you and ask you questions and understand how to utilize this loan.
Right. So the whole platform, I built everything on Instagram, but the 203kway.com,com you know there's more information on there about how i do things how i help people i have a whole community that i built really to help people with this because i had no information when i got into this about this loan product and really how to use it specifically as a real estate investor specifically to like get into the game um but yeah the 203kway.com um or even your instagram what's your Instagram at the two or three K way to Matt Porcaro, but the two or three K way as well.
So, uh, I just, I dedicated when I first started this, I said, I want to make sure that I have all the information out there about this that I never had. So, yeah.
So you're not only the president, you're also a client. Yeah.
So you yourself have used the two or three K the worse.k the worse yeah um you know really the long and short of it was that i was trying to get into real estate investing for a very long time in new york really high cost of living really expensive market and uh i read rich dad poor dad which i called taking the red pill because you know i grew up in an environment working class you know parents told me to go to college, get a degree and go work nine to five. They had their own business.
So like that actually like a like a consistent paycheck every month was that was what they wanted. Right.
The grass is always greener type of thing. So I did that and I did it and jumped into it and then realized immediately that this is not what I like or enjoy.
And then also realize that that's also not how people get rich. So when I read Rich Dad Poor Dad, I read about real estate and I thought real estate sounds amazing.
But in New York, I was like, I don't think I could buy my own house, let alone multiple houses. So the 203k and finding out about this was a culmination of me kind of researching and finding my way to break into the game for such a long time.
And I really almost found it out by accident, but it's ultimately will leverage me into the game with very little out of pocket, but created, you know, six figures of equity and net worth on my first deal. Let's go.
Well, so let's get to the strong point of the 203k loan. What exactly is it? Like why, what exactly is it and who really is the best use case for it? Yeah.
So the FHA 203k loan is an FHA loan. So if anyone's familiar with the FHA loan, it's, you know, it's a governmentally, a government backed loan product that, um, you know, allows people that are just starting out, uh, to buy a house with very little out of pocket, right? Three and a half percent.
The 203k version is a version that allows you to wrap renovation costs into the

mortgage. So it was meant to kind of get the zombie homes off the street and give people

the ability to not only buy a house, but renovate it and fix it up and make it the way they want.

One of the cool things about it is that it also allows you to buy up to a four unit property. So you can buy a multifamily property.
And this is really big with the house hacking community. Right.
Yeah. So obviously housing costs are the number one cost for anybody.
Right. Like your rent or your mortgage payment is usually the biggest cost.
So house hacking has become very popular where you rent out portions of your house to cover your mortgage. Or if you're you know, you really get a good deal, pay for more N plus cash flow while you're living in the property.
So the 203K really just pours gasoline on the house hacking method, because not only are you able to buy a multifamily property, but you're also able to fix it up, build some equity into the deal, which is what I did, and take that equity to go repeat the process, take that money back out and go buy more multifamily real estate. So it is like house hacking on steroids.
I mean, it's like the burr method and house in your own home, in your own home with only three and a half percent down. So, you know, I love the burr method, right? Cause as an investor, I'm buying a rental, a true rental that I'm not going to live in, right? Alabama and throughout Florida and whatever.
Sure. So I love the model.
And the The reason why I love the burr method right because as an investor i'm buying a rental true rental that i'm not gonna live in right alabama and throughout florida and whatever sure so i love the model and the reason why i love the model is because essentially at the end of the day first you have the option to have no money left in it right you you do it you do good enough rehab you refi all the money out that you already have in it the the like cherry on top in the good old days which is only about a year and a half ago is you could actually even get cash out refi you could actually get cash in your pocket yeah when the loans were a little bit nicer to us now that all may come back here you know in the next year or two but the burn mild for a real estate investor is like to me at least it is the perfect model because you don't leave in and if you do it right you don't leave any money left in now even if you have to leave a couple dollars your roi on that model meaning i'm always looking for a 20 return yeah so that means if i leave 10 grand in i want to make sure i get that 10 grand back out as whole within five years right and that's a very similar model to what we're talking about here where you're basically going all in on your personal home renovating it updating it making it pimped out and you have very little money left in the deal because they finance it all yeah i mean this is insanity so when you talk about like return right so to put it into perspective on my first, my book, my first house, I bought a crack house duplex in New York. Okay.
Um, it was just, yeah, it's a real story. Um, it was literally a crack house.
Um, you know, nobody wanted to touch it with a 10 foot pole, but I was kind of the only thing I could afford even in the New York market. Like even I'd like, I still had to scrape the bottom of the barrel.
Um, and I was using the bank's money and it was very low risk for me. I only had to put 9,500 bucks down on this two family.
Right. And how much was the purchase price? So the purchase was 270 and I put 80 into it to renovate it.
So I was all in for three 50, but only 9,500 at a pocket for that. 95, you had 10 grand.
You had 10 grand yep into this property and you renovated it it was a full crack house I mean this is like the end all be all for real estate if if if people are watching this at justincolby.tv or listening on apple or spotify like everyone should be looking into this like if you are sitting here I have friends that literally last night text me like i really want to buy a new home yeah but the homes i want that are already pimped out look beautiful they're the ones i can't get there with the loan rates right now exactly so what would you tell them go find it not find the neighborhood not the nicest one bingo and go renovate it yourself yes it takes time this isn't listen we can paint the perfect picture but it takes time right like this isn't but you're going to be into it for a fraction i mean legitimately a fraction of what you would be in if you bought the already done model you're using other people's money which is real estate estate investing 101, right? And in addition to, like you said, buy the ugliest house on the nicest block. And most of the thing, like when you're a real estate investor, you're just starting out, right? And you're looking, you're watching the TV shows and HGTV and you're like, you want to flip a house, whatever.
And you look at a house and you're like, oh, all right, well, I have to purchase it. I have to put 20, 25% down.
And then I have to come out. Then I have to finance the renovation portion of it.
And they're looking at hundreds of thousands of dollars. And that was what I was struggling with.
I was like, how the hell does anybody do this? You know, I was 20 something years old. Yeah.
Like I had, you know, again, 10, 15 grand, that was it. And that took me a long time to save up, right? Like this, that was like the most money I had ever had in my bank account.
So, you know, when you look at ROI and using the bank's money, remember, this is a government-backed loan product, and this is a way to launch you into the game. Now, you know, we could talk more about like how to repeat it and kind of stuff like that.
But ultimately what it did for me was it just leveraged me in really quickly because off of that 9,500 bucks, again, we'll call it 10 grand, the 10 grand in the first year, I built 150,000 in equity into the property. And then I rented out both units after I moved out a year later.
And it's still to this day, cash flows me like $2,000 a month, 2,500 a month. So when you look at like, when you, when you say like, you look at a, you know, for example, if you're looking for a deal, right, you're like,, I want to make a 12% cash on cash return.
Right. That's a respectable return, right.
On a property. Right.
My cash on cash return with that two Oh three K property was like 600%. I was just going to say something.
It's like, I don't want to say infinite, but it's like, God, at that point you're like, it's like not even in the same, it's not even the same universe. You know, it's funny.
I use the analogy, like in our world world of real estate a lot of people talk about like a three extra turn on investment right like if you're going to go market you want to get a three extra turn on your investment things of that nature right this would be like you can't even compare the two when when you take our normal world and you say hey great you want a three extra turn i'm a 600 extra turn. Yeah.
Like you say, why aren't more people doing this? Now the caveat is, is more traditionally for a home you're going to live in, right? This is the model, but owner occupied burr model, right? House hacking. So there's a trade-off with everything, obviously, right? The reason they're giving you the very low down payment, the way, the reason they're giving you the lowest possible interest rate that you can get at whatever it is at the moment that you get it is because owner occupancy to a bank is the most stable asset class.
But you're able to do this to leverage yourself into the game. And it's not a first time home buyer loan., you're saying like with your friends, if they're willing to go move into another property, it just is owner occupancy.
It's not exactly first time homebuyer. Now, obviously, you know, it works well for that.
It's, you know, it's also for the person that already has like a consistent income, right? Nine to five person, someone that's already working that maybe wants to escape it kind of like I did did this is your way into it with very little out of pocket and then reap the benefits very quickly because what i did was once i had that equity yeah not to mention the equity but also the experience of like doing it um you know the track record i was able to show my deal to private money lenders and to agents and be like wow this guy's a player we're in bankability. I mean, because I call it bankability, but yeah, that's big.
I talk about that a lot. I don't think people realize what that means.
Like when you build, when you increase your network worth 200 grand, like, you know, people are struggling like, oh, I can't find good financing for these. When you go to the bank and the bank runs your numbers and they, they see what you have on your asset, you know, on your asset schedule, and they see that you have like hundreds of thousands

of dollars in equity. They know that you're good for it.
Fact. That if they really had to like come down on you, you got some assets.
Yep. So they're more willing to be more flexible with you.
So one of the biggest things that I was so surprised about when I got that first deal was how much one deal changes your opportunity,

changes how people talk to you. I'm an electrical engineer by trade.
You go to a party, you talk to people like, oh, what do you do for work? I'm an accountant. I'm an electrical engineer.
You go to a party and then you talk to people and you're like, oh, what do you do? I invest in real real estate you immediately become the most interesting person in the room now someone watching this might not be want that but it's just a crazy thing to to think about that like the opportunity that comes your way and it only took one like i remember thinking like oh i only did one like i'm nobody sure but that one the distance between someone that's never done it to someone that has is massive. So when you do that, you've accomplished yourself.
You've proven yourself that you can do it. And then you just ride that wave and that momentum.
And that was the beauty of this. Think about that one got you into a room that I'm sitting in.
Right. Gets you into another room I'm sitting in.
And then all the people that I'm with. Because you're one.
Yeah. People want to go, you know, I use the analogy, swallow an elephant,, right? They want to go get the whole thing right now, all of it at once.
Take one bite at a time, just like every human puts on pants one leg at a time. But a lot of the listeners, a lot of you watching this on YouTube, you want the whole thing right now.
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One, it got him into rooms he never would have been able to get into without the one, right?

So let, because now I'm really curious.

Yeah, of course.

Let's take me. I live in Miami.
We're in Miami.

You just flew your happy ass from New York down to Miami to rock this podcast I'm super excited we're gonna go grab some food here shortly if you have time yeah of course um I have the flexibility to live anywhere I want I love my life you know my family you've met my wife and daughter the whole thing and I hope to meet your family here soon. But I'm very aware,

as you just had your second child recently, and I'm about to have my second. Changes the game a little bit.
I get it. I do get that.
If I wanted to move somewhere, let's just take Scottsdale, Arizona. What if I wanted to move back to Scottsdale? I have a permanent residence here.
I own it. I have a loan on it.
I have a million dollars of equity on equity on it right does that and the home i'm gonna want is in the millions right is there a price point that this loan won't work for if i already have a home am i not allowed to use this um and let's just use me as the example because now i'm like maybe this is a move yeah, and I'm not, there's not working the system. Like I would move, I would make this next thing a permanent home.
Right. The guidelines are very black and white.
I mean, you know, at the end of the day, to answer a bunch of the questions, right. You know, first off it is based off of national and local loan limits for Fannie Mae FHA, right? So those you can Google, you look up FHA loan limits or Fannie Mae loan limits in Scottsdale or in Arizona, wherever you're looking to move.
And you'll see that they're there. Now you'll be surprised.
Often people are very surprised that, you know, it's a lot higher than you think. For example, you know, in, in where I'm at in New York, a single family home, the FHA loan limit, I think, is like $1.4 million or something right now.
So respect. So there is a baseline.
Obviously, you're looking at some sweet pads. But remember, that's the loan limit.
Now, what's not to say that you being a great deal finder yourself, you find a deal that you know the ARV is going to be $2.4, but you pick it up for $1 or 100 or I mean a million and you're putting 400 grand into it, it's going to be worth two and change. It only goes, the loan limit they give you is based on- It's not the value of the home, it's the loan limit.
Correct. That's the highest loan you can get.
So it doesn't mean I have to buy a home that is only worth 1.4. Right.
And so long as you qualify for it is the big thing too know if you and then again if you're going into the new residence they're going to ask and you plan to keep your miami residence they're just going to say okay what are you doing with the miami residence are you renting it out what are you like if you're if you're covering or if you could afford both that's that's doable too it is a dock loan right so they are looking at your income sure and your debts and what thatTI ratio is. They look at a 50% debt to income ratio.
That's really what they judge you off of. So that's your maximum, right? So whatever your income is versus your debts, you want to be your gross income, um, needs to be 50%.
So do they, um, would I have to have my personal residence in Miami already rented out before I made the move? So,'s a couple different loan products that exist, and they have different requirements. FHA is the stricter one.
Fannie Mae has a product called the Homestyle. I'm actually doing it on my own home right now.
So I practice what I preach, man. We use the Homestyle loan.
We're renovating our own house. That's another example.
We picked it up for $615. We're putting about $200, $300 into it, but it's going to be worth like $ worth like one three when we're done so we're building almost a half a million in equity financial purchase and rehab on that as well yeah absolutely so again getting the worst so my neighborhood i literally was just messing around the other day so i go and buy the 800 000 but let's just say i even have to add square footage does it allow for that everything all you get there's really no limit addition cost as long as let's just use the example it's 1.4 just like in New York just to keep the example yep as long as I'm all in for the loan at 1.4 or less yep it doesn't matter additions add a thousand square feet add a pool yeah whatever we added 800 square feet to my house and I can now I can add a pool if it didn't have a pool.
Great question. FHA, the 203K FHA is a little more strict.
They're not really that strict. Really just has to be integral to the house itself.
You could renovate, you could get nice finishes. You could have a pool and I could redo a pool.
You could redo a pool. Now pool now the home style loan which is fannie mae's product which is the conventional product is a lot more flexible you can build a pool a pool house a basketball court whatever it's kind of just gives you carte blanche now they will so obviously there's the loan limit but what they really uh look at for for you know for your average buyer is they look at what the arv of the property is going to be um and they give you you know up to 100 of that on the home style on the fha 203k this is pretty wild they'll finance 110 of the arv so they'll actually let you over leverage it by 10 um obviously not something i am a big fan of as a real estate investor like i feel like you've seen that story before with uh 2006-7 yeah yeah you do but i think i think the reason that fha probably does it is because again they know that you're renovating it for your own home and they probably again it's the owner occupancy so they're assuming you're going to be there for a little yeah they assume you're going to be there for a little while so like if you're willing to over leverage it you know if you're there in 10 years the appreciation is going to make up for it and you'll be fine you know interesting this is this is an interesting thing and i would tell you most investors should be looking like it so ironically as someone who's a full-time real estate investor i'm not a big advocate of buying your own home yeah a lot of people aren't yeah and this kind of changes that for me because i think like an investor so i moved to miami from scottsdale and we did buy a home because my wife wanted to own the home here yeah fair but i still look at it as an investment tool because what i just told you i probably have roughly a million dollars dollars.
That equity is only useful to me if I go use it, but I have roughly a million dollars of equity in this home. Bankability too, right? It gives me bankability.
So in the sense of, hey, we might move somewhere. I want to buy a rental.
I want to buy this flip. I can go get that money out of my home and use it as a tool as a real estate investor.
But this, what we're talking about, actually kind of spins my concept in my head saying, well, maybe everyone should actually buy a home because they have an opportunity, be a real estate investor while doing it. And it doesn't have to be permanent.
This loan, you don't go to jail if you leave the home in two years like you did. Yeah.
It allows allows you to become an actual real estate investor even buying your own home and then i would make an argument everyone should because if you're adding the value just like a flipper or burr again a burr yeah i want to add so much value i have equity and then when you have equity you have the bank ability and then you can go rinse and repeat this model essentially forever, depending upon your lifestyle. Right.
I say that this is like the new American dream. Right.
We can't trip and fall into a house anymore like we could like society could 60 years ago. Right.
Or 2005. Yeah.
Right. You have a you have a pulse and an ant to sign.
You got a loan approved. Um, that was me by the way.
I literally, yeah, I'd got a 6%, a hundred percent finance deal, top of the market, brand new build. They didn't care.
I just like submitted my social security and they're like, yeah, you're fully approved 6% interest. I was like, it's wild.
And to that point, right? Like you talk about like the assets versus liabilities and there's that like common thing that Robert Kiyosaki said is like, you know, um, your own home is, is a liability. It's not an asset.
It's other homes that become assets, your rental properties are assets, but your own home is a liability because typically for most people, their own home as they go in and they spend a ton of money to, you know landscape it and repair it. And over the course of 30 years, it's not a true investment.
You're not making money on it. Now, appreciation will go up.
But again, I think his point is when you add up all the expenses and you add up the interest that you pay over it on 30 years, you ever look at it, you know what obviously a truth in lending statement is, right? right? So when you take out a 30-year mortgage on a $500,000 property, over the course of 30 years, you're actually paying over double of that 500 grand. So in what universe is that a good investment? Right.
You paid a million dollars to make $500,000. Right.
Right. Now, of course, it'll appreciate a little bit.
But OK, maybe you break even. With this method, with building, you know, again, it's value-add investing, right? It's the BRRR strategy.
It's a way to force yourself into some equity and basically just like press the fast forward button on the process. And that gives you that leverage and that creates it into a true investment.
Now, to make things even better, again, you can buy a multifamily or even now, just as of like really last year, they're letting you forecast the future rental income or letting you use the rental income of accessory units like down here in Miami. They have like casitas, like little mother-in-law suites, right? Typically, they wouldn't use that rental income to qualify you.
So you're able to take that rental income and really offset your mortgage, or if not cover it all in these higher costs of living areas. And one cool thing to know is that for every $1,500 in rent that you'd be getting from either, there's ADUs, accessory dwelling units, which are becoming huge right now because there's such a lack of housing in the U.S.
right now. ADUs are sweeping across the nation.
So if you're saying to yourself, oh, I can't buy a multifamily. I live in an area that's only in single family homes.
Well, you could just plop down a casino. I mean, you could even buy one of those like Amazon houses, those prebuilt prefab houses and drop it in your backyard.
The 203K will finance that. You're just blowing.
I mean, that whole Amazon housing thing. It's crazy.
Amazon's just going to own the world at some point. Yeah, they will.
I mean, this is getting insane. Yeah.
Yeah. So like you could buy it, you could buy a prefab house.
Obviously you have to like, you know, finish it and do some like stuff inside, but like, it's a prebuilt structure that you drop in your backyard. As long as your zoning allows it, you can get the rental income from that, qualify yourself for more.
Again, now that's a true investment. You're how you're making money off your own home.
And that's an investment. And that's where you're basically beating the system.
When I say like the American dreams new, like this is the new American dream, right? When my family came over from, you know, like Italy and, you know, from, uh, you know, from Ireland. Right.
And they moved to New York city. They all house hacked.
Yeah. It was called like, this is how we're going to afford to live in New York city.
They had multifamily properties. They lived in these tenements.
They all pitched in one of them in the family was the lucky one that had the note and they took all and they all combined their rent together. That was how people that immigrants came over to the United States.
That's how they were able to afford it. And that's how a lot of people do it.
You see it, you still see it to this day, immigrant families come in and they share housing. House hacking is like the most American thing you could do.
If you're a young kid, I mean, I don't know. And I know you coach a lot of people for this, but I would even say if you're a young kid and what I mean, young, you know, yeah if you're in your 20s going to college just out of college this is the move go buy a home in house hack using this loan this would be everything now you might need can can you do like co-signatures co-signers on it you know because of course 21 you may not have the dti kind of ratio and all that other stuff but yeah then you get all your friends to pay you rent you effectively are living for free you're actually paying down your home mortgage which we know the first five to seven years is heavily interest rate bill anyways they're all paying that down you now have your very first investment it is a 21 year old 25 year old 30 year old that essentially you're going to have the bank ability from having all this equity that all your friends just paid you down right you have a party house that you're going to love anyways you're going to be with your friends all the time anyways you now actually have your very first investment that could make you a millionaire before you're 30 depending upon where you buy it 100 this is like the i keep saying no brainer to me yeah because i'm even sitting here just thinking like instead of giving my kid a fund or a college fund or whatever you go buy her a house to do this with and actually help her understand the value of money help her understand business and if for sure get her into the real estate game it's it's free money that everyone could take advantage right? And it's, you know, I'm not the biggest fan of the government by any means.
Sure. But I think it's one program that they really did get pretty right.
And just with like anything else, like you said, it takes effort. Now, you know, what's the quote? Like to the victor gets the spoils or whatever it is.
Like, listen, you're not going to get something for nothing right do you have to live in the home like while it's being renovated no so you don't have to actually like physically occupy it so what happened in my case right um you know i bought the property it was an eight month renovation so the the requirement is you have to be you have to intend to be there as your primary residence for a year after the closing date. So what happened was the renovation took me eight months.
Now in my position, I was lucky enough. I was able to live with my family at the time.
So I didn't have, I didn't have to pay for two, like a mortgage and rent at the same time. However, they have it built into the loan because they know.
Yeah. But, but one of the cool things and one of the cool features is is like they understand that you might be paying housing for another place while this is being renovated so they give you the option to wrap up to now they just change it to up to nine months of the mortgage into a night of your mortgage payments into the loan so now you don't you buy the property not pay out of pocket for it while it's being renovated

then when you then when you're done you can go in and then start making the payments so i feel like this is going to make me want to move every two years it's listen and i'll just build a portfolio yeah for the rest of my life and i'll just need to sell my wife on this idea yeah but honey we're gonna have you know 42 million dollar homes across the country and and we're out.

And the coolest thing about it is again just very recent so here's the thing right obviously we know what's going on with the market right everything's changing everything's getting more and more expensive it's getting harder and harder for millennials to buy a house um let alone renovate it um we saw it was all in the news like there was a big downturn in the amount of mortgages being endorsed, right? It was like an all-time low or the lowest in 18 years, whatever it was, right? And people were just not buying homes. They thought that jacking the interest rates they thought would help it, but it didn't.
Actually, people were just like, well, we can't afford anything, and sellers are like, we can't go anywhere. Right.
So it did the opposite. Like, you know, value stayed up.

So FHA and Fannie Mae, even though they're government-backed entities, they're still entities and they still need to make money.

And what happened was they had to go back to the drawing board and be like, well, how else are we going to continue to make these programs more feasible, more attractive?

Because we got to do something because we're not bringing in any business we have no mortgages being endorsed so um they made a lot of changes recently number one being that fannie may typically fha was the only product that you could buy a four unit up to a four unit property with only three and a half percent down or a low down payment um if you own or occupy it right? With Fannie Mae, you could buy a quadplex, but you would have to put 25% down, even if you lived there. Fannie Mae changed it where now you can buy up to a four unit property for only 5% down.
And one of the big issues people were finding with FHA, we were just talking about it with one of the guys over here about the self-sufficiency test, right? FHA has this thing where like, if the property doesn't pay, it makes sense. I mean, it's common sense.
But FHA had this test where if the other three units, if you're living in a quadplex, if the other three units couldn't cover at least 75% of the mortgage, they wouldn't give you the loan. And it knocked down a lot of people's opportunities to buy quadplexes.
It also exists with triplexes, same kind of deal. Fannie Mae stepped into the mix.
They don't have that same requirement. So as long as your income can do it and you're able to factor in that future rental income, you can do this now.
And then Fannie Mae, unlike FHA, Fannie Mae allows you to repeat the process. They allow you to have up to 11 of these in your name at any given time where fha only allowed one what so i can have 11 of these yes including your what is the length what is the length of like having to move or like how quickly can i buy it living it a year so every year i could move my happy ass as long as long as you follow the guidelines on what you're doing you have a you have a something that's going to cover the debt on the previous property um and you qualify on income wise and you're moving in in earnest into the next property absolutely sanity to me yeah and five percent down every time like you so i know people right now are probably feeling the same way I'm feeling.

The best place for them to inquire more is just go hit you up on Instagram.

Instagram's the best place.

Now, is there any place that they can apply or is there something that they can?

Because I know I'm sitting here and I get the privilege of essentially asking the questions I want to know.

But I'm sure these watchers and the listeners are like, Matt, how do I know more? How do I learn more? So Instagram? Yep. 203k way.
The 203k way on Instagram. I've been posting consistently every day for six years on there.
And again, my, when I built this, all I wanted to do was, you know, I got done with that first deal. And I just remember sitting in that property, being done with the renovation, smelling the paint the paint on the walls smelling the new floors like looking around and just being like how the hell do not more people know about this right why did this take me so long to even know it existed and mind you like my it wasn't a walk in the park for me because I didn't have someone like me that knew about it to walk me through it I kind of had to just figure it out on my my own, which I'm glad I did.
Right. Because it taught me so much about it.
So when I created my whole platform, the 203k way, I just wanted to let everybody know about it. So my Instagram, you know, my YouTube, I have all the information you could ever want or know step by step.
You know, obviously people are like, OK, listen, I get it, Matt. I understand it.
I want to do it, but I just want to do it and get it right the first time. Make sure I slam dunk it.
So I do work with people one-on-one and I coach people through it and guarantee that we walk you through the process to get you six figures of equity, get you cash flowing day one, right? Using the strategy. So you could go to the 203kway.com slash apply to apply to work with me.
It's not for everybody. You just have to make sure that you're the right fit for us to work together but um that's an option as well what so when i mean i just want to not be totally selfish with the questions i want to keep doing it i'm just like i always say like the questions that you have are probably the questions that everyone else has on this not money people know about it yeah and that's kind of the benefit i have going on podcasts and stuff like this is like, you know, people are like, Oh, what do you want to talk about? I'm like,

you're interested in it. Just ask because there's so much to know and there's so much I could tell,

but the questions that are obvious to you are probably what everyone else is thinking. Well, I think the obvious thing for any person looking to be a true real estate investor would

be, I would encourage everyone to, you can do it on a single family home, but I would probably go

do a duplex, triplex or quadplex. I would really encourage that.
I'm kind of asking questions like, hey, if I were ever to move, would this probably be a better strategy for me? And now, everything that we're seeing with loans, right? Interest rates going up, whatever, which is not even that bad. It's not.
People are making it way more than it needs to be. My 203K, the first one I did, six and a half percent what are what are rates look like now for a 203 it's the same as fha so yeah it's it's an fha loan now there's a lot of lenders out there that don't do this or they'll claim to do it or they'll say don't do it you is because you can help navigate them where to go right so here's what i'll tell everyone listening to this everyone watching this on on youtube make sure to reach out to Matt.
Like, if I were to use this, I would be calling him saying, hey, where do I go? What do I do? What lenders do I do? What app do I need to fill out? Like, the questions I'm having is, like, how far down the path do I need to go before I start the process, right? Do I need to just go get the approval first? Or do I need to go find the house first and then go make sure I get approved? Do I want to have an offer in on on a house yeah where do people start the first thing to do is work with a lender that knows how to do these now luckily over the years i've been able to build relationships with lenders that do this they do it nationally i call them my preferred lender partners i'm not a loan officer i'm not a real estate agent i'm just a big fan and proponent of this process yeah um you know You're a spokesperson. I am.
I really am. I'm like the unofficial 203k influencer.
I was just going to say, you guys better get this guy a sponsorship or something because this guy's pushing weight over here. I don't need to be on any government payrolls.
But, you know, I've been able to build that. And for every lender out there that will tell you, oh, it's too much of a pain.
know, I always make the, I always make the analogy. If you have a Porsche, right.
And you have to get the oil changed or something, your tires rotated. You don't bring it to a Honda dealership.
Right. Right.
Now the Honda mechanic could probably do it, but like, why would you, he's going to fumble over it. He's going to make mistakes.
He's going to, you know, have you really just give you a problem with your asset. Right.
So, um So the 203kway.com slash lender, you go there, fill out a quick form, say what market you're in, what you're, you know, little couple other questions. We'll put you in contact with a lender that's in your market that specializes in these loans and does them day in, day out.
You know, one of the cool things too, is like, you could wrap in like damn near all your closing costs. Like all my students, people I work with like when I say three and a half percent down I get three and a half percent down so anyone that's quick with math right when I said 9,500 bucks on a $350,000 loan that was my first deal yeah anyone that does math and is like you know not one of me but people that are done quick with math will be like well that's that's actually like 2.5 percent or 2.7%.
How'd you, was that? I got a full 6% seller's concession back at closing. So you could get 6% back at closing with FHA of the purchase price.
My 6% seller's concession overpaid my closing costs. So I got a check back at closing.
I was actually supposed to lay out like another couple grand. Instead, that money came back so my net out was 9 500 because you're able again when you find a good deal you do all this stuff you could wrap in all your closing so the principles are still the same though find a good deal find the worst home in the best neighborhood like it comes down to the same principle as i would teach as real estate investors 100 find the right deal and now the caveat you're going to live in this one but find the best deal for you at the best price and then the same thing figure out where the end value is going to be make sure you are well under that i would make the argument you want to be at 50 of the end value yeah so if you buy a million dollar home you better hope that is two million by the end of it that's the right type of deal yep they're going to finance up to 1.4 million in in the New York area.
Who knows around the country. You still have to use investing principles.
100%. That's the key.
That's why I love this so much is if you're listening or watching this, you already have enough understanding of investing principles. You're interested in investing.
You're just going to help them take that. Everyone reach out to Matt, two or three K way, but like, because they need to learn more.
They need to have someone like you to coach them through this process. Like I've done this 16 years.
I'm still going to call you and say, Hey dude, I think I'm going to do this thing. Help me make sure I'm buying the right type of home.
I'm getting the credits I need that I'm getting them. The tenants and the foundations of real estate investing are the same, but it's the nuance of the loan itself and how it operates is where I come in and specialize in because I know how to pull every lever in the process, right? I've helped hundreds of people do this and like, I know where to push the button, where to pull to get the most, keep as much money in your pocket as possible, where to, where to leverage and pull the most out.
The other cool thing, like we're talking about finding a good deal and that's obviously obviously the most important part of any real estate investing endeavor, right? The coolest thing about this is because you're putting so little out of pocket, because you're paying such a lower interest rate than a typical investor using like a DSCR loan or something like that, or an end buyer, the deals pencil out easier. I call it the Goldilocks zone.
You're basically playing in this, in this, in this part of the market where like you can, you can afford more than like a flipper or a wholesaler, but you're not playing with the retail buyers because retail buyers are looking for move and ready stuff. That's going to pass inspection, right? You can go on the MLS and everything that's in as is condition and stuff.
They say like cash only, like you can purchase all of that. The, the, the really, the only thing with the condition is it needs to be some existing structure of some kind it doesn't have to be there's no such thing as a two two you know too messed up of a property there's also no such thing as like too nice of a property yeah you could move into a you could get a house that's moving ready totally financeable but if you want to renovate the kitchens and bathrooms and as long as it you know the loan to value works out you could do that too it has all the principles and like i was just thinking like the only caveat is if you wanted the aesthetic that that doesn't count within the loan meaning you know when i bought my home here in miami so we took out all the lawn we put in turf we put in pavers yeah that's aesthetic they're not going to wrap that in the lawn because they will on a home style they will for sure 100 yep yeah yeah that's interesting because I'm just thinking about like homes that I would like maybe I want to remodel inside that's the obvious yeah but what about the backyards and like making them look better because they're just wow or they didn't do anything to it yeah i mean you could do all that and then fannie mae also mind you has two other products that you don't have to occupy the property fannie mae home style loan you can get a 10 down second home loan so as long as you live there some portion of the year follows like the second home standards right you have to live i don't know what the exact number is yeah you could buy it and renovate it with only 10 down and then they have an investment product where you can go and buy another property um only put 15 down but they give you the purchase price plus the renovation airbnb is now you know that's usually like a hard money lender in my space you're talking about it is a flipper as a burr guy i buy i remodel it my lender makes me put 10 down yeah they will refi me out of the remodel now in my space i actually have to pay the first draw they re they reimburse me yeah isn't the same points up front stuff like that is it the same thing in these type of loans where you're paying the contractor the first 20 or 30 or 40 50 grand then the lender reimburse or is it is it no you don't have to pay out of pocket for your interest the check goes directly to the contractor this i mean listen we only have so much damn time but i could pepper you for hours yeah so because again if you're watching this if you're listening this i would make the argument if you're in your 20s at all if even 30s or more it doesn't really really matter.
But this is your way in to my world, to the real estate investing world, without necessarily making it a business per se, but you're getting your foot in the door. The amount you would learn by just doing this and buying your own home, I mean, you've really changed how I view buying a home because it becomes an investment tool because you get the bankability, you get the equity, you're not a lot cash the reason why i like the burr is if you do it right your money's all out you don't need to have any money into that thing right yeah i mean listen three and a half percent of your own money in your own personal home that you've created 30 percent more value 40 percent more value like that's a no-brainer on your return on investment what's the, what's like the average appreciation rate right now in the U S do you know what it is? I think it's like somewhere around five or 6% a year.
5% a year. Okay.
So think about this. If you renovate your house, you're the new top of market.
Yeah. No matter where you are in the country, you renovate it.
You are the new comp. You are in the new standard.
Okay. So you're already at the top of the market so that alone when you get your appraisal you're gonna get a bump because your new finishes you're brand new so right off the cuff let's just say on the low end you're making 10 of equity if you even like don't even plan to be a real estate investor you're just setting the comp right now you also appreciate it five percent a year let's call it five percent five six percent right you doubled your down payment by the time you're done with your renovation like i have a guy that's doing a big renovation right now it took him a long time year and a half it's a million plus dollar property big renovation his equity has gone up like a hundred thousand dollars in the time it's taken him to renovate the property.
He's not even in it yet. And he's already made a respectable year's salary in equity just by owning it off of, I mean, this was a million dollar property.
He only put 35 grand down, three and a half percent. So he- That is so wild.
Yeah. Yeah.
Triplex in New York. And it's,.
So like you're you can't. I just say like this is not an FTC thing to say, but like literally like every person I've worked with, like never loses.
You're putting so little down. If you follow my strategy, you work with the right people, obviously, that like know what they're doing.
Yeah, it's you can't lose on it. It's three and a half percent.
percent it appreciates when you have an asset it's a real estate there's the benefit of having an place to go make of course in the game of real estate investing that's guys make sure you go follow matt procaro he is my good friend um i'm gonna be peppering him with questions at lunch yeah but uh 203k on Instagram, YouTube, follow them, but apply, like get engaged with them. Like don't do this alone.
That's the one thing I would say, because if I decide to do this, I'm not going to do it alone. I'm going to be peppering you with questions.
It's all about building that foundation from the get-go. As long as you do that, it's really hard to fail on this.
This is phenomenal. Yeah, man.
This is phenomenal.

Thanks for coming by. Thanks for having me.
All right, y'all. I'll see you guys on the next

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