I got a call from a customer today who decided they would use one of their "buddies" that had a small outfit to do a big 203k project. There is nothing wrong with using a friend to be your contractor but you may want to do some homework on their experience level and look at some past projects.
Streamline 203ks are great for smaller projects because usually the lender will disburse 30-50% (depending on lender) of the funds up front for starts and material costs. On larger projects you really need to have a contractor that is set up and has had experience in doing large scale projects because the contractor isn't paid any money until at least some of the work is completed already. This happens on the conventional renovation loans and on Full Ks or "Consultant Ks".
This means you want a contractor that is well capitalized or has sufficient credit lines to start your project. If they don't have access to funds to start your project you may have bigger issues after closing is you haven't asked your contractor the right questions.
ASK:
How many renovation loans have your participated in for the construction?
What is the timeline on start / completing this project?
Are you familiar with the draw process on these type of loans and are you comfortable with submitting the permits/paperwork to the lender to get yourself paid?
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