Published 2/21/2024

Photos description... this is a before and after set. You wouldn't be allowed to do this today. That pile of rubble was all that was left of a milking barn. The lender and borrower (a licensed contractor) tried to put this off to us as the remains of a house foundation. In these days we could contact HUD and we did, to get a green light and moved forward to building that house. Lee, from HUD noted a footing with a foundation bolt and asked that Iput that in my truck and insure it was inserted into the foundation at the time of constrution. My truck at that time was a Cadillac Coupe de Ville. Lets get back on track... 

203ksoftware.com, 203k loan, 203k certified contractor,

Can I use multiple contractors on my 203k project?

This comes up time and time again. This is like a double edged sword.

1) Limited 203k loans are not a problem, it is the way the program was designed. It allows you do smaller jobs where the borrower obtains bids from up to five trade contrators. This is typically what a general contractor (GC) does for you. In this case and this case only the borrower is acting as a GC by doing so. Limited 203k work can have NO structural issues and it should be noted that if you order a "structural pest control report" that is a signal that your project may have structural issues and that alone could trigger this project to be a "Standard 203k".

2) The problems arise however on larger projects the home owner or borrower cannot be the contractor, we need to have a GC in charge. Someone who knows what he is doing and knows his subcontractors with the ability to coordinate the various trades so they don't conflict with each other. If the borrower is a GC the lender has the option to let them be their own GC.

When a home owner works with a lender who does mostly Limited 203k loans they might be instructed to get bids from the subcontractors in preparation of ordering a consultation. This is not the way to make the consultant happy or the borrower. 203kcontractors.com

The GC will get bids from his/her subcontractors and then put their markup on those costs. This is how they make their money. When the borrower goes out and gets subcontractor bids, thinking they are doing themselves a favor... while, in reality, they are setting themselves up for a big let down.

We have actually tried some of the smaller Standard 203k loans with multiple contractors and found them to be more trouble than they are worth. When the borrower is getting subcontractor bids they are in effect working as the GC and the Standard 203k specifically calls this "self help" and most lenders will require the borrower to be a licensed GC in the state where the home or property is located. 203konline.com

We did have a few over the years where the general contractor allowed a Septic Contractor to be on the job and the lender allowed the project to go forward with two contractors. But we had one, and, thank goodness, only one, where the home owner chose the low bid numbers from two different contractor, only toafind out neither of them wanted to be on the job till the other one was finished... the project too two years to complete a project that should have taken three months. I won't allow that to happen now or ever again. You have two bids, choose one or the other, the home owner is NOT allowed to cherry pick from each. Take the lower bid or not, but there is no splitting the bid between two contractors.