Tag Archives: detroit mortgage lenders

5 Ways To Avoid Mission Creep & Finish A Renovation Project On Time

During a renovation project, expectations are at an all-time high. At the beginning of a project, both the contractor and borrower are excited to begin the renovation. However, when the conditions change from excitement to complacency as the eventual “mission creep” sets in, sticking to the renovation deadline can become a problem.

What Is Mission Creep & How To Avoid It?

Mission creep or scope creep is when one or more of a project’s components creep outside of the parameters that were originally set. In our case the project’s components would be the Specification of Repairs (SOR). The decision to keep a project on time and on budget in most (if not all) cases depends on the communication between the contractor and borrower. This is crucial for several reasons:

  1. Project Understanding: Clear communication ensures that both the borrower and the contractor understand the scope of the renovation project. This includes details such as the desired outcome, budget constraints, and timeline expectations.
  2. Timeline Adherence: Timely completion of the renovation project is essential, especially if the borrower plans to move into the property soon after renovation. Open communication allows for setting realistic timelines and addressing any delays promptly to ensure the project stays on track.

Watch this quick video to learn why contractors should avoid overpromising to keep the customer happy.

  • Quality Assurance: The borrower’s expectations regarding the quality of work need to be clearly communicated to the contractor. Regular discussions and inspections during the renovation process help ensure that the work meets the desired standards, and any necessary adjustments can be made promptly.
  • Problem Solving: Issues or unexpected challenges may arise during the renovation process. Effective communication between the contractor and borrower enables them to collaborate on finding solutions efficiently, minimizing disruptions to the project. If an impasse occurs, get your HUD 203K Consultant involved. The consultant may offer a perspective that both parties may not have thought of to smooth out a potential misunderstanding.
  • Legal & Contractual Obligations: Clear communication helps in understanding the terms and conditions outlined in the contract between the borrower and the contractor. This includes payment schedules, warranties, and any other contractual obligations. It also helps in resolving any disputes or misunderstandings that may arise during the renovation project.

Overall, effective communication between the contractor and borrower is essential for the success of a 203k renovation project. It helps in ensuring that the project is completed on time, within budget, and to the satisfaction of the borrower.

HUD 203K Consultants Are Not Project Managers

In my work as a HUD 203(k) Consultant, I occasionally come across homeowners who think it’s my job to oversee their contractor’s day-to-day operation like a project manager, and that’s not the case. I can see why there can be room for confusion. The rehab process can be confusing and even overwhelming to first time homeowners who need to figure who does what fast. That’s where this article comes in! 

If you’re a home buyer that’s confused about your HUD 203(k) Consultant’s role, you’ll find your answer here. Keep scrolling to learn the difference between a HUD 203(k) consultant and a Project Manager.

The Difference Between a HUD 203(k) Consultant & a Project Manager

The role of a HUD 203(k) Consultant is distinct from that of a project manager, construction consultant, rehab coordinator, or whatever you’d call it. Why is that? Well, the differences lie in the responsibilities and focus areas.

HUD 203(k) Consultant:

  • Specialization: HUD 203(k) Consultants specialize in the Federal Housing Administration’s (FHA) 203(k) Loan Program, which is designed to help home buyers finance the purchase and renovation of a home in one mortgage.
    • Inspection & Approval: HUD 203(k) Consultants primarily focus on inspecting the property to determine its current condition and identifying necessary repairs or improvements. They play a key role in ensuring that the proposed renovations meet FHA/Non-FHA guidelines.
    • Draw Inspections: HUD 203(k) Consultants conduct draw inspections during the renovation process to verify that the completed work aligns with the agreed-upon plans and specifications.

Project Manager:

  • Overall Project Oversight: Project Managers are responsible for overseeing the entire renovation or construction project, regardless of the financing method. Their role extends beyond FHA-specific requirements.
    • Budgeting & Scheduling: Project Managers handle the budgeting, scheduling, and coordination of all aspects of the project. They ensure the work is completed on time, within budget, and according to the client’s specifications.
    • Contractor Management: Project Managers may hire and manage contractors, negotiate contracts, and handle day-to-day communication with the construction team.
    • Risk Management: Project Managers are involved in risk assessment and mitigation, addressing issues that may arise during the project.

While a HUD 203K consultant focuses on FHA compliance and inspections related to the 203(k) loan program, a Project Manager has a broader role in overseeing all aspects of a construction or renovation project. The distinction arises from the specific requirements and objectives associated with the FHA 203(k) loan program.

Want a quick summary of what a HUD 203(k) Consultant does? Watch the video below!

Happy New Year – 2022

Happy New Year!!!

A new year is upon us and as I had time to reflect, I have a lot to be thankful for. Since everybody gives a “New Year’s Resolution(s)” I was thinking on what kind of resolutions can I give myself. After thinking about it, I concluded that the best “New Year’s Resolutions” that I can give to myself is to give to others.

So, here are my best “New Year’s Resolutions” that I can give to you…

Resolutions #1 – To all the “First Responders” (Active Military, Veterans, Police, Fire, etc…) I’m giving you a 10% discount off the following services:

“Home Inspections Services”

and

“Residential Design Preliminary Services”

Just produce documentation supporting your claim as a “First Responders” and you will receive your 10% discount.

Thank you for your service protecting us.

This resolution will end on December 31, 2022.

Resolutions #2 – To all NACA members, I’m giving you a $25.00 discount off the following services:

“All Home Inspections Services”

Just produce documentation and you will receive your $25.00 discount.

This resolution will end on December 31, 2022.

Resolutions #3 – Now until “Valentine’s Day, 2020”, I’m giving the same 10% discount off the same services just like the “First Responders” to everyone else…

However, this resolution will end on Valentine’s Day, February 14, 2022 for everyone who is not a “First Responder”.

That’s all for now. Enjoy ringing in the New Year and let’s get ready to go to work.

What a Summer – 2021

Spring 2021:

As we continue to recover from the Covid-19 issue, I wanted to give you an update on current, upcoming events and opportunities.

Safe Practices continues

As a reminder, People, Places & Things LLC and PPT Inspections are still operating safe practices until the end of the year. These safe practices including the following…

  • Clients should limit the number of people attending inspections to as few, as necessary.
  • All parties should meet the inspector in front of the property- NOT inside the property.
  • Inspectors will provide disposable (non-vinyl) gloves for each participant (if needed). Masks will not be provided but may be brought and worn if desired.
  • All gloves used during inspection will be collected and disposed of immediately upon exiting the home.
  • Sanitary wipes and/or hand sanitizer will always be accessible during the property inspection.

It is important to recognize that as home inspectors and rehab consultants, we are entering homes and touching surfaces that may be contaminated by this virus. During the entire process, we need to stay focused on the home buying activity and the process of the inspection.

“New Decade – New Home Seminar Series”

This educational series was schedule for various times in 2020, but was cancelled due to Covid-19. This year, we will start our series next month during National Homeownership Month. This “Online” presentation will included valuable information that can benefit the housing professionals. For more information, please click on the link:

https://www.facebook.com/pptunisoul

More detail information is coming to you soon.

That is all for now.

#203kconsultants #NAFHAC #203kdiscoverydays #203kproject #203klender #203krehab #203kloan #203kcontractor #renovationproject #renovationloans #homerenovationloan #203kconsultant #203krehabloan #203kloans #fhaloan #fha203k #generalcontractors #homeinspectors #homeinspections #buildingdesign #residentialdesign #homedesign #fanniemae #fanniemaehomestyle

THE PAUSE IS OVER – Here is the “New Normal” (For Now)…

The “Staying in Place” order has been lifted so in the State of Michigan we can resume somewhat the new normal for now. So as a reminder, People, Places & Things LLC and PPT Inspections are still operating safe practices until further notices. These safe practices including the following…

  • Clients should limit the number of people attending inspections to as few, as necessary.
  • All parties should meet the inspector in front of the property- NOT inside the property.
  • Inspectors will provide disposable (non-vinyl) gloves for each participant. Masks will not be provided but may be brought and worn if desired.
  • All gloves used during inspection will be collected and disposed of immediately upon exiting the home.
  • Sanitary wipes and/or hand sanitizer will always be accessible during the property inspection.

It is important to recognize that as home inspectors and rehab consultants, we are entering homes and touching surfaces that may be contaminated by this virus. During the entire process, we need to stay focused on the home buying activity and the process of the inspection.

Here are some wonderful opportunities for the clients to participate during the month of June.

New Decade – New Home Seminar Series that was schedule for April 18, 2020 has been postpone until September 12, 2020. The current format was to do a live presentation but due to the current Covid-19 health issue, the decision to have a live in person event will be made soon.

“First Responders” (Active Military, Veterans, Police, Fire, Health Care Professionals) I’m giving you a 10% discount off the following services:

“Home Inspections Services”

and

“Residential Design Preliminary Services”

Just produce documentation supporting your claim as a “First Responders” and you will receive your 10% discount.

This resolution will end on December 31, 2020.

NACA members, I wanted to say congratulations for you going through the NACA Home Buyer Program on home ownership. So as a thank you for you going throughthe program, I am giving you a 10% discount off “Home Inspections Services” during the month of June.

Just produce your NACA ID # and you will receive your 10% discount.

More information and offers are coming soon.

Thank you for your business.

#203kconsultants #NAFHAC #203kdiscoverydays #203kproject #203klender #203krehab #203kloan #203kcontractor #renovationproject #renovationloans #homerenovationloan #203kconsultant #203kcontratista #203krehabloan #203kloans #fhaloan #fha203k #generalcontractors #homeinspectors #homeinspections #buildingdesign #residentialdesign #homedesign

A PAUSE… DAWN COMING SOON

Light at the end

Okay, being “Staying in Place” at home is beginning to get to us. However, hope is on the horizon as in Michigan, May 1 is fast approaching and the state government will have to make some important decisions. It does not mean that we will be getting our lives back before Covid-19 but it means that we will began to do a slow burn back to becoming a normal society. As the weather gets warmer and some of our industries are getting to go back to work (housing market, I hope), golf course (please) and attending church service in person (cannot wait) we will live by the specter of seeing if the health experts gets the prediction correct on Covid-19 second wave is coming or if we as a society can withstand a possible “Staying in Place” order during the summer or fall months.

Since I am an opportunist at heart, I am hoping for the best but preparing for the worst. So, until the time we are getting the all clear from the proper authorities, PPT Inspection process under Covid-19 will continue.

Why?

Because even when other industries will be permitted to go back to work (housing market), there will be a transition period and during that time the protection of the client and their representatives, seller and their representatives and to myself will be paramount. As a reminder…

  • Clients should limit the number of people attending inspections to as few, as necessary.
  • All parties should meet the inspector in front of the property- NOT inside the property.
  • Inspectors will provide disposable (non-vinyl) gloves for each participant. Masks will not be provided but may be brought and worn if desired.
  • All gloves used during inspection will be collected and disposed of immediately upon exiting the home.
  • Sanitary wipes and/or hand sanitizer will always be accessible during the property inspection.

It is important to recognize that as home inspectors and/or rehab consultants, we are entering homes and touching surfaces that may be contaminated by this virus. During the entire process, we need to stay focused on the home buying activity and the process of the inspection.

Hope that helps and its almost over. Yay.

New Decade – New Home Seminar Series

Home Seminar Design Final #1

What better way to start off a new decade than with buying your very first home? Of course, the process can be quite confusing. PPT Inspections is here to help by hosting a homebuying and home inspection seminar in Detroit, MI.

When you join our first-time homebuyer seminar, you’ll get valuable information about:

  • The homebuying process from start to finish
  • The power of using a rehab loan to get the house of your dreams
  • Finding the neighborhood and home that is right for you
  • What to expect during the process, from showings to closing

We’ll be hosting our first-time homebuyers seminar on Saturday, April 18th from 9:30 a.m.-3:00 p.m. Continental breakfast and lunch will be provided. The seminar will be held at:

PW Community Development Nonprofit Housing Corporation
20011 Grand River Avenue
Detroit, MI 48219

In addition to learning valuable information about the homebuying and home inspection process, all attendees will receive a gift bag and will be entered to win prizes

RSVP today by  reserving your seat via Evite at…

https://www.evite.com/event/0310HOJCF7RKWEZRMEPKJYCD3RPNDQ/activity

Use the QR Code…

QR

Or call to get more information…

877-399-203K

What can I do for you in 2020?

2020

Happy New Year!!!

A new year and a new decade is upon us and as I had time to reflect, I have a lot to be thankful for. Since everybody gives a “New Year’s Resolution(s)” I was thinking on what kind of resolutions can I give myself. After thinking about it, I concluded that the best “New Year’s Resolutions” that I can give to myself is to give to others.

So, here are my best “New Year’s Resolutions” that I can give to you…

Resolutions #1 – To all the “First Responders” (Active Military, Veterans, Police, Fire) I’m giving you a 10% discount off the following services:

“Home Inspections Services”

and

“Residential Design Preliminary Services”

Just produce documentation supporting your claim as a “First Responders” and you will receive your 10% discount.

Thank you for your service protecting us.

This resolution will end on December 31, 2020.

Resolutions #2 – Now until “Valentine’s Day, 2020”, I’m giving the same 10% discount off the same services just like the “First Responders” to everyone else…

However, this resolution will end on Valentine’s Day, February 14, 2020 for everyone who is not a “First Responder”.

That’s all for now. Enjoy ringing in the New Year and let’s get ready to go to work.

 

Why a “Renovation Loan” Works For You – Part 5 – The most important player in the rehab home renovation process.

Part 5 – Rationale:

You get a phone call from a potential buyer or from a lender asking the question – Can you do a 203K Work Write Up? Normally the answer should be “Yes”. However, after getting the information on the details of the project, I ask this question, “Has the buyer selected a general contractor?”

Well…

This may sound absurd but the most important person on this process is not the lender (whom controls the loan and distributes the funds) nor the borrower (whom found the home and will be paying the mortgage) but you guess it, it’s the general contractor.

The role of a General Contractor

contractor 1

Most rehab lenders have a standard procedure to assess a contractor’s eligibility. A general contractor is required to submit cost estimates along with the license documentation, a copy of the commercial liability insurance policy needs to be submitted for approval. It does not hurt to have references, credentials and financial data at the ready, if asked from the lender.

Then an agreement is reached with the contractor to complete the work at the agreed price within the stipulated timeframe. An IRS w-9 form must also be collected for the general contractor and for any other vendors involved in the completion of the renovation work. This step is necessary prior to release of any fund advance to the contractor for initiation of the repair work.

A general contractor is expected to complete the proposed work in accordance with the details outlined in the written estimate, homeowner/contractor agreement and approved change orders. All the repair work and improvements should be completed under the applicable local codes and ordinances. Several permits are necessary and must be secured prior to beginning any concerned work. All payments required for permits will generally be listed in the 203k contractor’s bid sheet.

Contractors need to understand the following

The borrower is responsible for approving, selecting and hiring whichever contractor they want, however for a large construction project, I recommend at least three contractor’s bids, including the borrower’s contractor. Why? Because as the borrower, you will have to live with the results after the contractors collected their payments and the borrower will have to pay on the mortgage. During the construction process, there will be issues that we all have to agree on. In addition, each contractor bid will not come out the same price, but the scope of work will have to be the same as the Preliminary Work Write Up (Feasibility Study). The lowest bid does not mean the borrower will select that contractor. That contractor may have to explain how they got those numbers. My job as a consultant is to review each of proposed cost in thorough detail. It is my responsibility to ensure that the repair costs are acceptable and within reasonable estimates. Anything that is deemed to be excess or unnecessary is resolved on consultation with the borrower, contractor and the lender.

The compensation structure setup by these types of loans does not always permit contractors to receive pre-renovation deposits/start-up funds. This is very important, general contractors must be financially capable of affording the start-up costs and ongoing expenses with any rehab renovation project. Ample credit lines with suppliers and subs and/or sufficient capital/reserves will be verified as part of the certification process.

So, how do the general contractors get paid?

contractor 2

The contractors are paid in a series of draws by the borrower’s lender through escrowed funds. At closing, the lender places the rehab/improvement funds into an escrow account. The general contractors need to be as knowledgeable as possible regarding the rehab process. The exception that a general contractor will receive funds at startups is the FHA 203k Limited. The general contractor receives a maximum of two (2) payments. After closing on the home, contractors may receive a portion of the job cost (maximum 50%) as a pre-construction payment, subject to lender approval but may take weeks to arrive. Therefore, contractors must be financially capable of affording all the start-up costs and a portion of the ongoing expenses with the 203k project (ample credit lines with suppliers and subs and/or sufficient capital/reserves). Once all the work is complete, the contractors can request final payment of the remaining portion of the job cost according to the proposal that was submitted and approved by the borrower and the lender.