For aspiring real estate investors, finding the right deal and the right funding is often the biggest barrier. Many are stuck chasing retail sellers, negotiating steep down payments with banks, or trying to compete with overcrowded “no money down” strategies that rarely deliver. However, Matthew Porcaro offers an alternative path that’s quietly transforming the way new investors break into the market and generate both equity and cash flow from their very first deal.
Matthew’s journey started with frustration, spending four years attempting traditional investment methods, only to hit roadblocks at every turn. He eventually discovered a government-backed renovation loan – the FHA 203k – which became the game changer for him and many he has since coached.
The FHA 203k loan is a powerful tool designed to help homebuyers not only purchase a property with a low down payment but also fund the necessary renovations to increase its value. Unlike conventional mortgages, this program allows buyers to put down as little as 3.5%, making it more attainable for those without deep pockets. Beyond the purchase price, the loan also covers renovation costs, closing costs, and even the first year of mortgage payments, alleviating the financial strain while the property is being transformed.
Matthew’s first experience with the 203k loan involved purchasing a distressed two-family property. With just $9,500 out of pocket, he was able to renovate both units using the bank’s money. The key strategy here was house hacking – living in one unit while renting out the other. The rental income from his tenant nearly offset his entire mortgage payment, resulting in positive cash flow each month. After the renovations and eight months of work, the property’s value soared, securing over $130,000 in equity for Matthew. This equity became the springboard for future investments, proof that a smart approach to renovation funding can accelerate a real estate portfolio quickly.
What makes the 203k loan even more attractive is its flexibility. Investors can buy up to four-unit properties using this method, applying the same low down payment. In states facing housing shortages, recent adaptations now allow buyers to convert single-family homes to include accessory units (like mother-in-law suites) and count that future rental income towards their loan approval. This creative approach expands opportunities, even for those in expensive markets like New York.
For many, the confidence to pursue a deal comes from mindset. Matthew’s upbringing was blue-collar, with little exposure to investing or creative financing. Breaking through early limiting beliefs about money was an ongoing process, but it allowed him to realize that opportunity isn’t just reserved for the wealthy or experienced. He built credibility for future deals through his success on the first one and was then able to raise over $500,000 in private money, mainly by simply sharing his story and offering others the chance to participate.
A crucial aspect for those considering the 203k way is the importance of working with specialists. Not all lenders have experience with renovation loans, so partnering with experts who understand the nuances is essential. The process involves a consultant who helps outline the scope of work and connects buyers with contractors and appraisers to ensure the highest after-repair value is achieved – sometimes allowing you to borrow up to 110% of the finished value.
Matthew emphasizes careful stewardship of borrowed funds and treating every transaction as a win-win. By focusing on the right structure, leveraging government programs, and maintaining a supportive mindset, even first-time investors can create massive equity and recurring cash flow, setting themselves up for long-term success.
The 203k way is not just about acquiring a property. It’s about launching a strategy that transforms your financial trajectory. For those tired of hitting walls with traditional financing, Matthew Porcaro’s system offers a proven pathway: start small, leverage creative funding, build equity and cash flow fast, and expand your portfolio with experience and confidence.
If you want more insights or guidance on using the 203k way to break through your investment barriers, connect with Matthew through his site or Instagram. The opportunity to build wealth and create freedom is within reach; with the right approach, your first deal can be the one that changes everything.
10 Discussion Questions from this Episode:
- Jay Conner and Matthew Porcaro both talked about how mindset shifts were crucial to their success in raising private money. What specific mindset barriers did they each face, and how did they overcome them?
- How did Matthew Porcaro initially approach his friends and family to raise over $500,000 in private money, and what scripts or techniques did he find most effective?
- The “203k way” played a pivotal role in Matthew Porcaro’s entry into real estate investing. What are the main advantages and unique features of a 203k loan compared to traditional financing or private/hard money?
- Why do you think, based on the conversation, so few lenders and real estate agents mention or promote the 203k loan product for new or aspiring investors?
- Matthew Porcaro and Jay Conner both highlighted the importance of providing win-win scenarios for private lenders. How does this approach build lasting relationships in real estate investing?
- The concept of “house hacking” was discussed as part of the 203k strategy. In your opinion, how effective is house hacking as a way to build wealth or begin investing, especially in high-cost markets?
- Spirituality and a sense of purpose came up during the discussion. How has Matthew Porcaro’s renewed focus on faith influenced his business approach or his desire to help others?
- The FHA 203k loan allows you to borrow up to 110% of the after-repair value (ARV), which is unusual. What are the risks and benefits of this policy for a first-time investor?
- According to Matthew Porcaro, most people can find sufficient funding by simply reaching out to their network. Why do so many new investors underestimate their ability to raise private money, and how can they get past that mental block?
- If you were considering your first real estate deal, what factors from Matthew Porcaro’s story or strategies would you want to replicate, and what, if anything, would give you pause?
Fun facts that were revealed in the episode:
- Matthew Porcaro kicked off his real estate investing journey by purchasing a two-family property with just $9,500 down, using a little-known government-backed renovation loan called the 203k. In less than eight months, he generated $160,000 in equity and positive cash flow.
- The FHA 203k loan allows a buyer to purchase and renovate up to a four-unit property with only a 3.5% down payment. Even better, the loan not only covers the purchase and renovation, but can also include closing costs and up to the first 12 months’ mortgage payments in the loan amount.
- According to Matthew Porcaro, the 203k loan’s after-repaired value appraisal lets you borrow up to 110% of the future value of the renovated home, providing extra leverage that most real estate investors aren’t aware of.
Timestamps:
00:00 Smart Leverage with Matthew Porcaro
04:01 Overcoming Imposter Syndrome in Investing
06:47 Building Trust and Team Success
10:14 Raising Private Money Through Help
14:43 Programming Money & The Rat Race
18:45 Transformative Power of Private Money
21:55 Awakening to Faith’s Depth
24:38 When Is Enough Enough?
27:35 FHA 203k Renovation Loan
36:52 Connect with Matthew Porcaro:
33:01 Loan Unlocks Home Renovation
35:23 Hidden Duplex Housing Opportunity
37:57 Finding Purpose Through Action
40:33 Specialist vs. Generalist Expertise
45:17 Home Renovation Scope Explained
47:55 Leverage Real Estate for Savings
52:17 DIY Isn’t Always Worth It
55:27 Transforming Lives Through Real Estate
57:20 The 203K Funding Strategy
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Jay Conner is a proven real estate investment leader. Without using his own money or credit, Jay maximizes creative methods to buy and sell properties with profits averaging $67,000 per deal.
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Creative Real Estate Deals: How to Fund, Renovate, and Build Wealth, the 203k Way with Matthew Porcaro
Jay Conner [00:00:02]:
Let me ask you a question. What if the deal was not the problem? What if the money isn’t the problem?
Jay Conner [00:00:10]:
What if you’ve just been looking in the wrong place for deals?
Jay Conner [00:00:14]:
Because right now, most real estate investors are stuck. Sellers want retail, banks want massive down payments, andevery quote unquote, no money down strategy you see online is overcrowded and overhyped. My guest today figured out a different path. Over four years of trying and failing at the usual real estate investing strategies, Matthew Porcaro discovered alittle-known government-backedd renovation loan that completely changed the game.
Jay Conner [00:00:45]:
He used it to do a live-in flip.
Jay Conner [00:00:48]:
That’s right, a live-in flip with just $9,500 out of his pocket, turned that into $130,000 in equity and locked.
Jay Conner [00:00:57]:
In a $2,000 a month positive.
Jay Conner [00:01:00]:
Cash flow and did all that in under eight months.
Jay Conner [00:01:04]:
No private equity fund, no conventional mortgages, just smart leverage and the right structure. That experience led him to create the 203k way, where he’s now helped hundreds of investors acquire high equity-flowing properties with as little as 3.5% down payment using renovation loan products most real estate investors don’t even know exist. Now, if you want to expand how you think about funding deals, raising private money without chasing hard money lenders, this episode is going to open your eyes in just a moment. You’re going to meet my friend and guest Matthew Percara right after this.
Narrator [00:01:50]:
If you’re a real estate investor and are wondering how to raise and leverage private money to make more profit on every deal, then you’re in the right place to raise private money. We’ll speak with new and seasoned investors to dissect their deals and extract the best tips and strategies to help you get the money. Because the money comes first. Now here’s your host, Jay Conner.
Jay Conner [00:02:18]:
Matthew, welcome to the show, my friend.
Matthew Porcaro [00:02:21]:
Jay, thanks so much, h man. I feel like a WWE guy running out of the, running out of the, the backstage with the way you introduced me, man. Thank you for that. It was like a Bruce Buffer-type intro. I’m, I’m a big fan. Thanks for having me.
Jay Conner [00:02:36]:
Well, it’s an honor to have you on the show. We’ve got many dear, good mutual friends. Tom Crow with Coaching Inc., Darren Bentley, family Mastermind, me, and you hang around some pretty, pretty, you go giving very, very smart people. Now you have funded your deals in all kinds of ways. You’ve raised over $500,000 in private money. You’ve also used hard money in the past, and on this show and episode, we’re really going to dive deep into how you’ve used the 203 strategy.
Jay Conner [00:03:12]:
So how about this? Let’s start. Since the name of this show is Raising Private Money, let’s start with the private money. So how areyo?. So first of all, you know you can use private money. And by the way, folks, when we’re talking private money, you all know by now we’re not talking hard money. I’m not poo-pooing hard money. Some of my best friends are hard money lending brokers. But private money is my expertise, and Matthew’s raised it as well.
Jay Conner [00:03:42]:
There are 20 reasons why I love private money. Put you in control. You’re offering an opportunity instead of chasing and selling and persuading and all that type of thing. But you’ve raised over 500,000, Matthew, in private money. How did you go about raising that money, and what type of deals did you raise it for?
Matthew Porcaro [00:04:01]:
Yeah, so great question. The way I raised it was very simply by earning some respect first, which I feel like I didn’t have in my crazy New York market, and then going on and realizing that I actually needed less experience than I thought. Like many of us do. I. I had imposter syndrome. When I, when I first got into real estate investing, I had done only one deal, my 203k deal, which obviously we’ll talk more about, but I did only one deal, and I used that money from my first deal, and I leveraged it into the next one. And then I was trying to, trying to scale up, and I remember speaking to a mentor of mine and him telling me, you know, I was just telling him, and I was, he’s like, all right, so what are your plans for the next one? And I told him, well, I’m gonna wait until this flip is done, and I’m gonna take that and go, you know, try to leverage into something bigger. And he’s like, why are you using your own money? I’m like, I don’t know.
Matthew Porcaro [00:05:05]:
No one ever told me I couldn’t, you know, for someone that I didn’t come for money. My parents never said the word investing in our house. Super blue collar. We struggled with money, you really, growing up. So even the idea that I could raise money, number one, was. Seemed impossible to me. It also seemed like I wasn’t worthy of raising money to be 100% honest with you. So when he told me that, I didn’t believe him.
Matthew Porcaro [00:05:31]:
He also told me that if you look at your cell phone in your phone book, there’s probably a million to $2 million in there right now,w ready to go, ready for you to raise. And I said, no, all my friends are broke. All my family’s. Doesn’t come for money. There’s no way that I’m going to be able to raise the capital that you’re saying, fast forward. He said, humor me. And, you know, he told me to, and we could get more into it, but he basically told me to go hit up my phone book and talk about the most recent deal that I just did, and say, you know, something to the effect of, well, I remember the script, so I’ll just say it. It was basically like, hey, Jay.
Matthew Porcaro [00:06:08]:
Jay, what’s up? It’s Matt. I know it’s been a. I know it’s been a little bit. You saw I posted on Facebook, I’ve been really doing the real estate thing. I actually have two or three more deals coming up. You wouldn’t happen to know anyone who’slooking to make about 10 to 12% on their money in the next six months, would you? And to my disbelief, that actually helped me raise, you know, pretty much all the gap money that I needed on future projects from then on going forward. And I never, ever had trouble raising money from there on out because it did two things. Number one, it made me realize that people didn’t really need to look to me to see how.
Matthew Porcaro [00:06:47]:
And when I first started, they weren’t really curious about how much I’ve done, and they just were more impressed that I did it. And I had a rap sheet to show them. I had people around me who knew what they were doing. I had built, you know, a good team around me. So that’s the first thing. But secondly, I think what was in. What’s interesting about that was Ithat was never directly. I think, like you even just said, like, your rules about private money is I wasn’t begging for it, right? I was more or less just saying, hey, do you know anybody that’d be willing to invest? Now, as you would probably assume and probably know, most people who said that, that I said that to, were like, well, I actually got some money, or I have something, or I can tellyyoue more about that and schedule a meeting and get going.
Matthew Porcaro [00:07:30]:
So my first couple of private money lenders were friends of the family. And I’ll be honest, too. It was someone who. It was usually the people I didn’t expect. But one of the things I was told when I started down this process was that, you know, never have any bias toward who you think has. Has some capital, they would love to deploy it or not. It could be the people you least expect, and often it is. So I used that when I got into this.
Matthew Porcaro [00:07:56]:
I’m in New York, so you know where I’m at. Properties are very expensive and raising even private money to kind of get the 5, $600,000 that I need,d with still a lot. So the way I did it, the way I used it, and continue to use it is for basically the gap between other financing options. Like I have like hard money, DSCR funding, whatever it is, to kind of come up with that down payment or that extra capital that I would need if I need it. Right. So it’s always been there as an option where I can get it. And as you said, get it very quickly at this point. And what I realized with it isthat nce you do one, it keeps coming back, and you do it successfully.
Matthew Porcaro [00:08:38]:
The only thing I’ve always focused on since then is making sure that I treat them, and I care about their money more than my own. So I always make sure that when I take it on, I’m the, I’m, I’m the best shepherd I possibly could be with it because. And I tell that to, you know, I tell that to my lenders as well. Like, I get paid last on every transaction. So I make sure you get paid, a nd and everyone else gets paid before me. If there’s nothing left over for me, so be it. That’s on me. But that’s how I’ve been able to do it and continue to be able to go out and raise every time I had to.
Jay Conner [00:09:10]:
Your story is so similar to my story as to when I started raising private money. In my first six years, I focused on single-family houses. My first six years here in eastern North Carolina, all I knew was traditional financing and funding, you know, the local bank, local line of credit mortgages. That’s all I knew until I woke up one day, and I was cut off from the banks with no notice to me in January of 2009. So I knew I had to find a better and quicker way to fund my deals. And the very first potential private lender that I talked to, and by the way, Carol Joy, my wife and I, we’ve had 47 private lenders, and not one of them had ever heard of.
Jay Conner [00:09:55]:
Private money, private lending, or self.
Jay Conner [00:09:58]:
Directed IRAs until I put on my teacher hat, which says private money teacher.
Jay Conner [00:10:03]:
They never heard of this world. So as a result, I was viewed.
Jay Conner [00:10:08]:
As the expert in the authority on offering this type of opportunity that they never heard of.
Jay Conner [00:10:14]:
But my story is so similar to yours because the very first potential private lender I talked to, whose name was Wayne, and I wasn’t going to ask him for money. I went to ask him for help, and I said, Wayne, I need your help. I said, I’m now paying insane high rates of returns to my investor, nd my private lender nd my deals. And when you run across somebody who’s complaining about the volatility of the stock market and making no money, local bank, would you refer them to me? And of course, you know what? Wayne said the same thing most of your people said. They said, well, well, what you got going on there? What kind of rate are you paying? And then, you know, there comes the conversation. And by, you know, with that approach, I was able to raise over $2 millionin my first 90 days by simply asking people for help and to spread the word. And so I’m not surprised that your initial experience and story with private money is the same as mine, particularly when you take on the right mindset. I want to talk about mindset here in just a moment, but since we’re talking about private money, I want to let our entire audience know.
Jay Conner [00:11:26]:
Just coming up right around the corner in a few weeks is the Private Money Conference. The Private Money Conference and Sharub. If you’ll switch out that URL, I want to give a special URL out that gives our audience $3,000 tickets for only a $97 registration fee. And that URL is www.JayConner.com/Event, and I’m an er not a o r.
Jay Conner [00:11:56]:
www.JayConner.com/Event, and be sure to check out the in-person Private Money Conference to learn what that is all about. Back to us, Matthew. The mindset so important from my own experience on attracting and raising private money. You mentioned you grew up in a home that didn’t talk about money, maybe didn’t have a good relationship with money, never talked about investing, blue collar. All that sounds like a very, very respectable American home life to grow up in. Hard working sounds like, you know, middle-income family, etc. Did you have to go through a mind shift in your mindset and the way you thought about money and that type of thing as you started investing in real estate and attracting private money lenders?
Matthew Porcaro [00:13:00]:
Jay, can I tell you the truth?
Jay Conner [00:13:02]:
I hope so.
Matthew Porcaro [00:13:04]:
I still am going through that. Right. And the reason I say that is because one of the biggest things we talk about is mindset, right? What we don’t realize is, and what I’ve realized over time, is to no fault of my parents, right. We talk about, you know, I didn’t come for money, but many people don’t. And I still, I love my parents to death. I mean, thank God they gave me what I needed. And like you said, they just didn’t have the, the understanding. It’s not, no one ever taught them.
Matthew Porcaro [00:13:34]:
And they, you know, my dad was hard-workingng guy, he had his own construction business. My mom was a stay-at-home mom. Right. So they did the best they could with what they had. But at the same time growing up, there’s a lot of subconscious stuff that gets put in your head that you realize as you get older, becomes really hard to break.
Jay Conner [00:13:53]:
It’s called programming.
Matthew Porcaro [00:13:55]:
Yeah. And I think, and I, and I, and I think the, and the reason I share this is that you, you talk about mindset and the shift. For me, it was never a pivotal moment. I mean, there are a couple of points, and I’ll make one or tw, but I think for everybody it’s like depending on where you come from, it’s always an evolving process, right? It’s your relationship with money and investing and real estate that has to evolve with time, and you can expect it that not so much that doesn’t happen for some people. But for me, it was never like a light bulb switch. It was a, it was a culmination of observations I made throughout my life. And I think, you know, the first big one iwaswhen I was young, seeing that it seemed like money-related conversations were generally the cause of stress and anxiety in my house growing up. Right.
Matthew Porcaro [00:14:43]:
So As a young 6- 7 year old kid, as you said, programming gets into my subconscious brain that probably doesn’t even understand money yet, is just being labeled with, hey, money causes stress, or if there’s a lot of it, it causes happiness. And it just made that wire, right? So you take that, and you run with that over time, and you get told constantly by your parents, hey man, hey Matt, you’re going to go to school, get a good job, get good grades, go work for a big company, go climb the corporate ladder, and you know, do that thing. So I did that, and I wasn’t a good student by any means. I just want to be clear about that. I got by, by the skin of my teeth, in a lot of cases. But I, I just kind of had that programming where hey, go get a good job, go do that. And I work here in New York, got a job in New York City, you know, by Many people’s standards, which was respectable, and, and, and, you know, what people aspire to. But that being said, Jay, I got into the rat race, we’ll call it, and it’s definitely a rat race.
Matthew Porcaro [00:15:43]:
In New York City, I was commuting three hours a day, an hour and a half, back and forth from, you know, the suburbs to the new to New York City every day, and was realizing very quickly that this isn’t how people get rich either.
Jay Conner [00:15:54]:
Right.
Matthew Porcaro [00:15:55]:
What my parents thought was how people, you know, are financially free isn’t really the way that made sense to me. So, you know, I ended up going, you know, I ended up doing a lot of research myself because I am very inquisitive, and you know, I was reading a lot about how people get rich and blah, blah, blah. And you know, I ended up reading a book which probably no one’s ever heard of before called Rich Dad, Poor Dad, poor dad, and, and, and, and you know, it’s funny because it is, it seems almost so cliche at that point. You know, how many lives it’s changed. I know it’s changed mine. For a, for a kid in my situation, working class, growing up, where the word investing was never even mentioned, that book is a life-changing, mind-altering book. It started with that. It started with that, but as I said before, it didn’t end with that.
Matthew Porcaro [00:16:47]:
It continues every day. I always try to remember back and put myself back on. How do I, you know, how do I make sure my spending habits correlate with what I’m trying to do in real estate in every aspect of my life? Right. Just because I’m investing in real estate, how do I, how do I diversify it? But that was the high level, I think the other, the other, the other big aha moment for me with, with regards to real estate and investing in general was realizing that there’s so much more money out there willing to be lent than you think. And you, we think that money is the problem,m and money’s not the problem, it’s everything else. And not to say anything, there’s aadifferent problem. But what I realized was that when you have the right people, you have the right deal flow, you have the right intention, you could present something good, there’s more money. I read somewhere, I think it was like a Dan Pena book.
Matthew Porcaro [00:17:46]:
Who, you know, Dan Pena, maybe he’s crazy, crazy old dude, but he’s, he’s a maniac. But he, he’s very divisive. But he, he wrote a book called Your First 100 million. And I think it said somewhere in the book that there’s, there’s way more money willing to be lent currently than there is in circulation, like tenfold. And I thought that was a crazy stat to think of. Like, there’s plenty of funding out there. You just need to bring it, bring people the right stuff. And, and when you have the right stuff, the, the, the financing actually becomes the easy part or the, the part with the least amount of resistance is how do you find the right team, have the right systems to deploy it, you know, have the right people around you and, and bring the right investments and opportunities to the people that are looking to invest in it.
Jay Conner [00:18:33]:
I’ve been saying the same thing for years in different words, and that is, there’s more money available than there are deals.
Matthew Porcaro [00:18:41]:
Oh, absolutely. Yeah, that’s an easier way to say it, probably, than Dan painting.
Jay Conner [00:18:45]:
And, the reason I know that is that I’ve got more private money, which I call sitting on the shelf, meaning it’s been pledged to me. They want me to put it to work, but you know, it’s, there’s more money than there are deals. Now I’ll tell you when I had my mindset shift, when I had my mindset shift, hadn’t been raising private money too long, but Carol, Joy, my wife, and I received a handwritten note in the mail that thanked us for being a part of changing their retirement years. This was a couple that was, you know, living off of retirement. You know, they had some money in the stock market, but they’re very conservative. And when we started paying them 8%, not 10%, not 12%, but 8%, it changed their retirement years in a way that they said in that letter. We have been able to travel back and forth to Florida, to I’m in North Carolina, back and forth to Florida to visit our grandchildren as often as we want to without worrying about money. That’s when I had the light bulb go off in my head, to where what I’m offering in this opportunity is, is just as important, if not more important, to them than it is for the funding of my deals.
Jay Conner [00:20:19]:
And so it’s all about creating these win-win, win scenarios. My dad just turned 92 years old w. God bless, he’s developing a 350-home development right now at 92 years old. Oh, I love one of these days I’m going to say, Dad, can’t we leave the office and just go home? You know, but anyway, he, he’s, he’s wide open. And dad told me many times, decades ago, he said, Jay, if everybody cannot win and everybody doesn’t have some meat left on the bone, don’t do the deal.
Matthew Porcaro [00:20:58]:
Yeah, it’s not a zero-sum game. Everyone could win.
Jay Conner [00:21:03]:
Absolutely.
Jay Conner [00:21:04]:
And there’s plenty. And you know, with the abundance mindset, there’s plenty to go around for everybody.
Jay Conner [00:21:10]:
So. In the short time that we’ve been.
Jay Conner [00:21:12]:
Visiting Matthew, I sense something. Tell me if I sense something correctly, would you call yourself spiritually motivated and faith-based?
Matthew Porcaro [00:21:28]:
It’s funny you say that. I was brought up in a Catholic, very religious household. I went to a Catholic high school. And I’ll be honest, I keep saying that to you. I’m an honest guy. But I guess I’ll be frank. When you go to Catholic high school, when you’re a teenager, you kind of go against the grain, right? You want to be a contrarian; you want to go against it. And I steered away from my faith for a bit.
Matthew Porcaro [00:21:55]:
And I would even say just recently I started seeing it more and more work its way back into my life. And it’s been a. It’s been, it’s been an incredible kind of. I don’t want to sound cliché, but awakening for me, I realized that there’s, there’s so much more to life than the secular stuff. And as I’ve been looking into it more and more, it’s not, you know, no matter what you believe in right there, everyone, everyone has, you know, some, maybe I wouldn’t say everyone, but a lot of people have faith from, from every different, you know, part of the world and culture and belief. But I think what I hang my head on the most when it comes to faith and spirituality is knowing that this is, this is just bigger than me, man. Like, like there’s. It’s okay to confide in, you know, a greater being, God, Jesus, and just kind of submitting to the fact that it’s bigger than us.
Matthew Porcaro [00:22:57]:
What happens? Things don’t happen to us; they happen for us. And how you take that and kind of that, I don’t know, man. It’s really, really awakening for someone who’s new to exploring his faith like me. It’s very. I don’t even know the word liberating is maybe not the right one, but liberating in the sense of knowing that when you go out there, you know that this is bigger than you, you know that there is a plan for you and you know that you’re never going to have all the Answers, but the answers will come to you in their own perfect way, in their own perfect time. It has been a big life changer for me. I’m. I’m a dad of two young kids, two and a four-year-old, you know, happily married and becoming more and more of a provider in my life, working harder and harder.
Matthew Porcaro [00:23:47]:
It’s been a blessing to kind of tap back into my faith and know that I’m not alone in this, and I don’t have to have all the answers all the time. Right. Sometimes being like kind of an A-type, you know, alpha type role, sometimes just like feeling like you always have to have all the answers and everything needs to be secular. It’s. No, it doesn’t. You can trust. You could trust in the Lord, you can trust in, you know, the universe to know that you’re gonna end up where you need to be. As long as you give, you’re a good steward of whatever you got in front of you.
Jay Conner [00:24:17]:
You just said something that resonated with me, and you said that it’s realizing that I’m not alone, I’m not in this by myself. And there’s something bigger than me, something bigger than me. That reminds me of a short story I’ll share, and then we’re going to dig into this 203k way of funding that everybody’s been waiting to hear about.
Matthew Porcaro [00:24:37]:
Sure.
Jay Conner [00:24:38]:
But not long ago, I was riding with a dear friend here in tow,n and we’d go on to get coffee or whatever, and out of the blue, he said, of course. And he knows what I do, real estate investing, and also, you know, a coach. Teach real estate investors how to raise private money. As a result, Carol, Joy, and I travel the nation all the time, speaking at events and, you know, Zoom trainings and stuff. And so out of the blue, my friend says, jay, let me ask you a question. I said, okay. He said, when is enough enough? And I said, well, I think I know what you’re asking, but let me dive in. I said, how can you say that in a different way? When is enough enough? He said, well, he said, Jay, he says, you know, and I know you all don’t have to be working as hard as you are, and, you know, doing all the traveling and, and, you know, the real estate investing and the coaching and et cetera, et cetera, et cetera.
Jay Conner [00:25:42]:
He said, how do you reconcile the Apostle Paul saying, to be content with whatever station of life you are in, and whatever circumstance you find yourself in, to be content? I said, now I understand the question. And I said, It’s a great question. And I said, here’s the answer to when is enough enough? And the answer is that enough is never enough. When it’s not about you. When it’s not about you. Enough is never enough. Let’s dive into this 203k way.
Matthew Porcaro [00:26:21]:
That.
Jay Conner [00:26:22]:
You’ve pulled a community together, Matthew.
Matthew Porcaro [00:26:24]:
Yeah.
Jay Conner [00:26:24]:
So you got the 203k loan. It’s, it’s a government loan. So walk us through, how does this 203k thing work?
Jay Conner [00:26:35]:
Sure.
Matthew Porcaro [00:26:35]:
So as you said, it’s a government-backed loan. It’s an FHA product. We’ve all heard of FHA before. And if you haven’t, FHA is the government-backed federal home buying insurance program. Right. So the government doesn’t lend you the money, but it insures the money. Basically, all it is is it allows home buyers to buy a house for only three and a half percent down. Has the, you know, we’ll call it the easiest requirements in terms of getting a mortgage.
Matthew Porcaro [00:27:02]:
And the whole point of this program was to get more people into houses. Because while the United States, you know, government maybe doesn’t do everything right by any means, and many governments don’t, they do understand the importance of the housing market in the United States. They understand that, you know, as you said, you’re a single-family investor. Single-family home ownership is, is the core of the fabric of our society. It really is the American dream, we call it. Whatever it is, having a piece of the pie is so important. So, FHA is this low down payment, government-backed program to help more people get into homes. Right.
Matthew Porcaro [00:27:35]:
Makes financing very favorable, allowing more people to get in. The 203k version is their renovation rehab portion. So what it does is it allows you, just like the two FHA mortgages, it allows you to get all the money to purchase the house, but in addition to that, it gives you all the money to renovate it that you need for the renovation budget. Plus it allows, it allows you the ability to wrap in closing costs. You’re able to wrap up the first 12 months’mortgage payments into the loan, so you don’t have to make a payment on it out of pocket while you’re renovating it. So essentially what it is, is it’s a great way to get yourself started into the, into the game, and rather than buy a house that’smoving-readyy and kind of just, you know, make your mortgage payment every, every, every 30 days for 30 years. The way I looked at it was an opportunity, if I looked at it through the eyes of an investor. How do I get myself started with my? I don’t own a house yet.
Matthew Porcaro [00:28:31]:
How do I get my first house to be a nest egg that I could build equity with, build some cash flow with, using house hacking, which we could talk more about? But basically, you know, buy your first home, use the bank’s money to renovate it, build some equity for yourself, and then take that equity and go and guy more. So it’s a low-risk, low-down-payment strategy that was effectively what got me off the ground in a really tough market here in, here in New York.
Jay Conner [00:29:00]:
So, 203,k first of a, ll is for primary residents, right? So you’re not going to, you, if you’re a real estate investor, you’re not going to use a 203k mortgage to fund a flip or buy oldand hold.
Matthew Porcaro [00:29:17]:
Hold unless you plan on living there for a short amount of time.
Jay Conner [00:29:20]:
I was going to say, unless you do xyz. So talk about that. Matthew, how can this be a long-term strategy? And what’s the shortest amount of time you have to live there as your primary residence before you could start renting it out? Because your first one, when you started, in less than eight months, you were having a $2,000 a month positive cash flow.
Matthew Porcaro [00:29:47]:
Yeah, exactly. So, so the way I think of the 203k and the 203k way as I call it, which the 203k way and that, you know, neon sign that my wife and son got me a couple years ago for Christmas is the 203k way is my way that I broke into the real estate investing game. I, I tried for many years, breaking into the game, and hit every roadblock you could think of. Wasn’t seeing any results with anything. I was trying to flip houses with no money and trying to raise capital without any experience. And I should have probably known you before that, and you would have helped me a little better with that. But I didn’t do too well with it on my own. But the long and short of it wasthat the 203k was basically my slingshot into real estate investing because it gave me the starting point.
Matthew Porcaro [00:30:36]:
It was basically like flipping a house with training wheels on because it only needed a little bit of money. I only needed a little bit of my money. I took 9, 500 down and what I was able to do was buy a two-family house. Now, this two-family house was next to the train tracks, right next to the door to a church. I knew from the beginning that this wasn’t going to be my forever home. But I knew it was going to be a stepping stone. So.
Jay Conner [00:31:03]:
So this was a duplex?
Matthew Porcaro [00:31:05]:
Yes, yes.
Jay Conner [00:31:06]:
Like in one, in one, in one house, you got two homes?
Matthew Porcaro [00:31:11]:
Yep, exactly.
Jay Conner [00:31:13]:
And you call it in New York something different than a duplex?
Matthew Porcaro [00:31:17]:
No, we call it a duplex or two-family.
Jay Conner [00:31:19]:
Okay, okay.
Matthew Porcaro [00:31:21]:
They come. I know everywhere across the country usually has different names, but one of the, one of the beautiful things that I actually learned pretty much by accident about these programs is that these FHA loans and 200 3K loans subsequently allow you to buy up to a four-unit property, still with only three and a half percent down. So, even so, living in New York, having a decent job, still could not afford a house in New York on my own, on my own salary. I was making maybe $70,000 a year at that time. And I got pre-approved for 250 or 260,000, which is laughable. In New York, you can’t even buy land really for that or an outhouse, but. Yeah, exactly. So on its own, I was really struggling.
Matthew Porcaro [00:32:07]:
I was trying to, I was placing a lot of offers on things, but real estate agents were laughing at me,e saying, good luck, kid. Not here. And so I was, I was really struggling with that. And when I was looking for more, I actually found out from my loan originator at thetime that he sent me one of these properties. He sent me these two families. And it was a, I mean, it was run down. They were, it was, they were selling drugs out of the front window. They kind of condemned it a little bit.
Matthew Porcaro [00:32:31]:
It was pretty beat up. And he sent it to me, and I’m like, hey man, I can’t buy that. That was over my budget. It was like 280,000. He said, no, what’s cool about this loan is it’s a two-family property. Now, what that means is you’re going to have a tenant in there, right? That tenant’s going to be paying you every month. No, with the good news with New York ithat, that’s as much as it’s competitive and really high priced, the rents are very high too. So, because of that, the other unit in the house was a three-bedroom unit.
Matthew Porcaro [00:32:58]:
And I was able to rent that out for $2500 a month. So they are, the lender can take that future $2,500 a month and forecast it to your approval. So what that did for me was that it raised my approval by about 100 grand. Now all of a sudden, not only did I have enough money in my account to buy the house, but I also had all the money I needed to renovate it. So, I bought the house for 270,000. I wrapped in $80,000 of renovation budget, plus the first six months’ mortgage payments and the closing costs,s all into the loan. So after my down payment,t I put 9,500 bucks down. I was all in for like $356,000, we’ll call it on the loan amount, and use the bank’s money to completely renovate and upgrade the house.
Matthew Porcaro [00:33:45]:
Eight months later, I got it done, got it reappraised. It was initially reappraised for 480, but then I got another reappraisal three months after and reappraised it for 510. So I built over 160, $170,000 in equity off of 9,500 bucks. Now, the best part of it was that I was living in one unit, renting out the other to tenants. My mortgage payment was only 2900amonth and I was getting 2,500amonth from one of the tenants. So I was.
Jay Conner [00:34:11]:
So you’re living in New York City for 400 bucks a month, right?
Matthew Porcaro [00:34:15]:
Right outside of it, but yeah, which is unheard of, right? So most importantly, though, it gave me the stepping stone. Now I had equity that I was able to leverage. Now I had some, now I most importantly had experience, right?. I had a track record. I, I could show people, if people ask me what I’ve done before, I’ll show it to them. If hard money lenders asked me, banks asked me, what do I have, what’s on my assetsheet?. I had something, right?
Matthew Porcaro [00:34:39]:
And that, that was ultimately what was the springboard into the next. But the power in it is, again, a coupleof things. Number one is the ability to get all the renovation covered, right. You don’t have to pay out of pocket for any of the renovation costs. The also the power with it is you’re able to buy multi-unit properties now, actually,,y as of this year, well, kind of, we’ll call it last year. As of last year, is the government actually pushing what they call accessory units? So a lot of single-family homes are, they’re zoned for single-family. But there is a housing shortage in most parts of the United States.
Matthew Porcaro [00:35:17]:
So what they’ve been doing is they, you know, you’ve heard of mother-in-law suites or granny suites or stuff like that. What they’re doing is with these lenders, they’re saying, hey, listen, we, we really need some, some affordable housing for people. If you have a granny suite or you can convertit into a granny Suite, we will now forecast the income of that mother-in-law suite, granny suite, or accessory unit, they call it as well. So now I call them my hidden duplexes. Basically, virtually any single-family house with the right setup can act as a two-family in any part of the country right now. So, for dang near any home buyer that’s in there that wants to buy a house and wants to subsidize their mortgage payment every month by having someone else pay them to live in it, you have all this opportunity to do this. And with the 203,k if it doesn’t exist, you can use the funds to make,t a,n d then get that to be a cash-flowing property while you live there.
Jay Conner [00:36:11]:
Matthew, I got more questions that I gotta ask. But before I ask them, in case any of our listeners or audience have to jump off, you are the expert. When it comes to the 203k way, house hacking. You’ve got $160,000 in equity in eight months. Positive cash flow went on to the next one. How can our listeners and audience get in contact with you to learn more about this amazing strategy that, quite frankly,y in my circle,e s I don’t know anybody else out there coaching or teaching on it. Because you have hundreds of studentwhoat you’ve helped learn how to do this. Go ahead and give out your contact info.
Matthew Porcaro [00:36:52]:
Yeah, so my best place to find me is my Instagram. So that’s where I hang out the most. I answer all the messages. So, instagram.com the 203k way. You could justGooglee the 203k way, and you’ll find me on Instagram. You know my website is the 203k way.co,m my YouTube channel is the only place where I’m not the 203k way. It’s just my name. So YouTube/@Matt Porcaro.
Matthew Porcaro [00:37:20]:
But you know, you could find me anywhere. And as you said, not many people talk about this, and there are a lot of reasons why, which we could get into in another one. But I just realized that when I did this and did it successfully, I just could not believe that agents and lenders don’t talk about it. Again, I had gone from a kid who was struggling so much, couldn’t find a way in,n to getting through this. Looking at the 150,000 in equity I built, having a place to live that I was basically paid for. I mean, I now rent it out for two. I still have that property. It’s a cash cow for me.
Matthew Porcaro [00:37:54]:
I mean,n I have $400,000 of equity in that thing now. But I mean, just think about it with so little out of pocket, with no experience, what I was able to do. I just couldn’t believe that more people don’t talk about it. And you talk about when is enough is when enough is enough. And it’s when everyone else around me is enough for them. And it’s kind of like I just, from that day forward, I’ll never forget, I finished, I got the final approval from the inspector. I, you know, I was smelling the new paint on the walls and smelling the new hardwood floors. And I’m just looking around, and I’m like, man, why do more people not know about this? And, I truly felt a calling in that moment.
Matthew Porcaro [00:38:35]:
I’m like, if, if, if lenders and agents are gonna, aren’t gonna talk about it, I’m just gonna start talking to my phone online, start posting videos about it. And I did. And sure enough, people, people, people heard the call, and it’s been amazing. And I’ve been really blessed to help so many people over the years since I’ve been doing it.
Jay Conner [00:38:53]:
That’s awesome. So again, contact information for Matthew is his instagram.com forward/the t h e203k way.
Jay Conner [00:39:05]:
The 203k way.
Jay Conner [00:39:06]:
You can Google him at the 203k.
Jay Conner [00:39:09]:
Where you’ll find him.
Jay Conner [00:39:10]:
His website is the 203k way.com.
Jay Conner [00:39:15]:
You definitely want to connect there with Matthew.
Jay Conner [00:39:17]:
A couple more questions before I leave.
Jay Conner [00:39:18]:
You go, Matthew, because this is just so intriguing. If you have a couple more minutes.
Matthew Porcaro [00:39:24]:
Of course, I’m happy to be here. Yeah, absolutely. Let’s do it.
Jay Conner [00:39:27]:
Excellent. So, as far as that mortgage, how does someone find? Do they have to find a local FHA mortgage broker, loan, or originator? Do they need to find a 203k mortgage lending expert? What is your advice do you give to people who want to go find somebody who’s licensed in their area to do this mortgage?
Matthew Porcaro [00:39:55]:
Sure. So it’s, it’s, it’s a big one. What you, what you said,d and you know what you’re doing. Right. S isit, that is one of the biggest swinging hinges on this process. Right. The reality is ithatmost lenders may be able to do them, but most lenders should not do them. Okay.
Matthew Porcaro [00:40:15]:
It’s like anything else in life. If, if, if you specialize in it, it’s going to be a lot easier, a lot, a lot simpler. Right. If I, if I need heart surgery. Right. God forbid, if I need heart surgery, I don’t go to my primary care doctor, physician for the heart surgery. Right. I go to a specialist.
Matthew Porcaro [00:40:33]:
Right. And the reason I go to the specialist is that a heart surgeon, now the doctor might be qualified to do some surgery, and they can do it. They’re a generalist. But if I want someone who’s going to work on me, I want the person twho’sgoing to always work on me. Right. Another good exam example I say is, you know, I have a Porsche, nd if I want to, if I want to bring my Porsche, I could bring it to a regular mechanic, a regular gas station. If I need an oil change, could a regular mechanic do the oil change on my car?
Jay Conner [00:41:01]:
Probably.
Matthew Porcaro [00:41:02]:
But would I rather the mechanicwho onlyy works on Porsches to work on my Porsche? Right. So the same rules apply for this. How do you find these lenders? At the end of the day, they do exist out there. There are lenders out there that specialize in renovation financing. The biggest red flag is usually if they say, oh, we can do that, or we, we’ve done it before. Right. I’ve tiled the bathroom before, Jay. Wouldn’t you want me to tile your bathroom? Okay.
Jay Conner [00:41:30]:
I promise you. You don’t want me to tile your bathroom, right?
Matthew Porcaro [00:41:33]:
Exactly. Exactly. I. Can I do it?
Jay Conner [00:41:36]:
Sure.
Matthew Porcaro [00:41:36]:
Do you want me to do it? Absolutely not.
Jay Conner [00:41:38]:
Right.
Matthew Porcaro [00:41:39]:
So the idea here is that there are a lot of different lenders out there. Now obviously, I’ve been lucky enough over the years to build a network of those. If anyone is listening, you could go to the203kway.com lender, and that’ll put you in contact with my lending team and my lending partners that specialize in this type of financing. But even if you know, let’s just say you’re local, you don’t have to be. It doesn’t have to be local in your market. Like, my lending team covers all 50 states, lending, especially mortgage lending at this point, for residential mortgages.
Jay Conner [00:42:10]:
So, Matthew, you’ve got lending partners?
Matthew Porcaro [00:42:12]:
Yes, we. Yes, we absolutely.
Jay Conner [00:42:13]:
Well, they don’t, they don’t need to look anywhere else.
Matthew Porcaro [00:42:15]:
No, they don’t. But I always like to say, I always like to keep, keep them honest. And even if one of my partners comes out there and does talk with them, the biggest thing I always say is no matter who you’re talking to, you should feel like this is not something that they do like that they can do, it’s something that they do, if that makes sense. Right, absolutely. Specialize in it. You don’t want to leave this up to someone twho’snever done it before. Because if you do it wit withl go a little haywire. Yeah, for sure.
Jay Conner [00:42:41]:
Well, I mean, it’s like, should a real estate investor who has never borrowed private money go out there and do it by themselves?
Jay Conner [00:42:55]:
No.
Jay Conner [00:42:55]:
Right? No.
Jay Conner [00:42:57]:
So, you know, same with you.
Jay Conner [00:42:59]:
If someone’s interested in this 203k way mortgage financing, you know, primary residence, house, hack it for a few months, get a bunch of equity, move on, then for goodness sakes, get in contact with Matthew. I mean he’s already got, he’s already got the lending contacts. Yeah. One more question, because it’s just an intriguing topic.
Matthew Porcaro [00:43:23]:
Yeah.
Jay Conner [00:43:24]:
And that is, you’ve got your three and a half percent down payment. That’s what’s required there. My question is, when it comes to the renovation part, I assume that an appraiser would have to give the lender anafter-repairedd value appraisal. I’ll repeat that, an after-repaired value appraisal, not a as is appraisal, for the lender to know what the maximum that they can lend out on this project is.
Matthew Porcaro [00:43:59]:
Jay, you nailed it. Now the sad part is that most loan officers don’t even know that. But, but you know it. So it just goes to show you what you could run into sometimes. Yes, you’re absolutely right. What’s. And this is you, ready to have your mind blown. This kind of for a real estate investor, you’re going to blow, it’s going to blow your mind.
Matthew Porcaro [00:44:16]:
Okay.
Jay Conner [00:44:18]:
Blow my mind.
Matthew Porcaro [00:44:19]:
Yeah, the. You’re absolutely right. They go after the, after renovated value. So when the appraiser goes up, the process goes like this, right? You find a property, you get it under contract, okay. Someone comes out, called a 203 consult a 203k consultant. It sounds scarier and bigger than it is. What it is is they’re a home inspector. So just like when you buy a house, and you buy a home,e and the first thing that happens is an inspection, right? A regular arm’s length transaction, right.
Matthew Porcaro [00:44:46]:
The first thing that happens is an inspection. In this, it’s a 203 HUD consultant inspection. Pretty much all 203k consultants are home inspectors. Theyalso have this other feather in their hat, which is 203k consultant, where what they do is they look at everything that needs to be done and repaired in the house. They write up a scope of work of what needs to be repaired, and then they also talk to you, the borrower, and they say, hey Jay, what do you want to do to the house? Here’s what needs to be fixed. The roof needs to be fixed. You’ve got to replace the windows. You know, you’ve got to update the electrical.
Matthew Porcaro [00:45:17]:
What do you want to do? You’re like, hey, you know what, Matt? I want to, I want to upgrade the kitchen. I want to redo the kitchen, add new cabinets, and new countertops. I want to add a bedroom in the back, in the back part of the house, and, you know, change the siding. The consultant writes up a whole scope of work for you, right? So that’s the beauty of it,s contractors hate writing scopes of work. People don’t know how to write a scope of work. But this consultant, this inspector, is writing that up for you. So that’s very clear for you to have. Now that what they use, now that you have that scope of work, and you bid that out to a contractor, the contractor agrees on that scope of work.
Matthew Porcaro [00:45:51]:
The contractor could be any licensed and insured contractor. There’s no such thing as a certified contractor. That’s a, it’s a myth that people get perpetuated license insured and experience, right? Not just someone who just flies by the seat of their pants, right? TOnce thecontractor you agree, the contractor gets the final say on the number. That number goes to the bank. The bank then sends out the appraiser. So the appraiser goes out with that scope of work, and they see, okay, here’s the house in its current condition. But what’s actually going to happen? So I’m not going to appraise it based on that. I’m going to look at what you’re going to do.
Matthew Porcaro [00:46:24]:
Okay? You’re going to have everything brand new. You’re adding, you know, 200 square feet off the back. And then they’re going to do, as you said, what’s called a subject to appraisal. They’re looking at the arv. Now here’s the part that’s going to blow your mind. 203k will lend you 110% of ARV. They will let you overleverage the loan by 10%.
Jay Conner [00:46:49]:
Now, obviously, ‘ve gotta tell, I gotta tell my listeners, if you’re taking a nap, and of course, you’re driving in your car, you’re not taking a nap. But if you’re sitting around or you’re on a walk or whatever, you want to wake up to what Matthew just said, 110% of aafter-repairedvalue. Why do they want to do that?
Matthew Porcaro [00:47:12]:
So great question. The reason they want to do that is simple, right? They’re lending to an owner-occupant, right? So they know that if you’re going to buy a house, you want to make it nice for you and your family, and there’s a good chance that you’re going to stay in it for a bit, right? They know that there’s some staying power. You’re probably not going to go through all this work to stay in it, you know, for a short time. Now, if you look at it through the eyes of an investor, like I said, you probably won’t want to do that. But on the flip side of that, the point I’m making with it is you have a lot of leverage to build in closing costs, build in mortgage payments. So the other thing too is when you, when they know you’re going to buy a house, they have it built in where maybe you’re not going to be able to pay for two places to live at once. Now I was lucky.
Matthew Porcaro [00:47:56]:
My parents still liked me, and I was able to live in their basement for no cost,t basically. And I was able to still wrap the payment, so I didn’t have to pay for a house that I couldn’t live in out of pocket. The beauty there with that leverage point is use it to your advantage to keep money in your pocket, not overleverage the financing. We don’t want to do that. We’ve all learned from that, at I t h, in,k many times in, you know, in the last 20 years, 30 years. Right. But the, the reason they do it that way is that now the way that I see it working the best is again, number one, if you feel really good about this property for the long term, right? If it is a multi-unit and it’s going to be a cash cow for you and you know you’re going to hold it for the long term, well, wrap in your closing costs, wrap in your mortgage payments, wrap in that stuff into the loan because let the future value of the property keep money in your pocket today. Right? I’m a big believer that my dollar is worth more today than it’s ever going to be worth.
Matthew Porcaro [00:48:50]:
No matter what, it’s always going to lose value. So I want to hedge against inflation by doing that. The second way is kind of alluding to what I was talking about earlier with the whole accessory unit stuff, right? If you use this, it’s very big in California, but it’s getting big everywhere right now. The Carolinas are doing it for sure. But the ability to have a single-family home and build an accessory unit off the back or something like that, that cost of construction might be, you know, a little bit on the front end, a little higher. But in the long term, it’s really going to be worth it. Right, because you’re maybe going to spend $150,000 to build a standalone accessory unit off the back of your house or do a garage conversion or something like that.
Matthew Porcaro [00:49:31]:
So on the front end, it’s like a big, it’s a big kick. But you know, if you could get that $150,000 unit that you just built cash flowing, you have 1500, $2,000 a month. If we go back to the old fashioned 1% rule, that’s crushing the 1% rule in every way, shape, and form. So it’s a great way to leverage it, to basically build in equity and build in cash flow potential to the property. Property. But as you said, it’s something you want. With great power comes great responsibility. Right.
Matthew Porcaro [00:49:59]:
You want to make sure that we’re not using that to overleverage ourselves. We want to use itsmartly. That’s what I teach and what I always talk about: how do we use this as an asset? I, I’m a big believer in, you know, Robert Kiyosaki says it in the book. I think it’s a good way to kind of round it out. Robert Kiyosaki says in your book that your own house is a liability, not an asset. And I agree with him on that. That I’d say for 99% of people, it’s an empty canvas that people paint on with money every month. Theyoverleveragee.
Matthew Porcaro [00:50:27]:
It’s the, it’s a really good savings vehicle at best. Wealth preservation, maybe, at best. But an investment, by definition, is something that puts money in your pocket. Okay. A regular house for most people isn’t that. I believe if you do it the 203k way and you start,t and you do this a couple times, whatever you, your first or next house, absolutely can be a great investment. It could be one of the best investments you ever make. You just need to treat it as such.
Matthew Porcaro [00:50:53]:
Is it paying me to live there every month through house hacking? And then am I able to buy something that’s undervalued? You do a value-add opportunity, add square footage to it, add another unit off the back, build equity into it using the bank’s money, so that immediately I’m capturing that equity that my parents waited 20, 30 years for.
Jay Conner [00:51:12]:
Well, I like getting that $160,000 in equity that you got in the first eight months of doing that deal. That’s just an amazing story. Does the 203k way allow you to do the work yourself, or does it have to be done by a licensed general contractor?
Matthew Porcaro [00:51:31]:
Great question. Licensed general contractor. And I always like to give the reason why. The reason is this. They know that even if you are a general contractor, even if you’re qualified to do it, remember this is an income-based mortgage. They’re qualifying you based on your income, you know, W2 earner, 1099 earner, whatever. Right. It’s income.
Matthew Porcaro [00:51:50]:
They’re looking at your debt-to-income ratio. It’s not an asset-based lending. So they know that you have a full-time job that’s allowing you to pay for this house. They know that if you’re an accountant, but you’re really handy. You’re going to go to work, you’re going to work all day because that’s what you’re paying for. That’s how you’re getting your salary. You’re going to come home, you’re going to eat dinner, you’re going to play with your kids, you’re going to put your kids to bed, and you thought that you were going to work on the bathroom again, tiling it like me. And you’re going to do it yourself to save money.
Matthew Porcaro [00:52:17]:
And they know that what’s going to happen is it’s going to be Tuesday night, you’re done with dinner, you put your kids to bed, it’s nine o’clock, and you’re like, I can’t do it, I’m going to go to bed. The reason they do that is to protect you. I know you’ve done flips, and you’re very experienced with this. I even came from taconstruction backgroun,d and I’ve learned that anytime I tried to do it myself to save money, all it did was lose me time and stress. So you can’t do it yourself. But I always tell people look at that as a positive because trust me, if you go and think you’re going to save money or save something out of it, you will be humbled. And if you don’t believe me, go try it. And I don’t.
Matthew Porcaro [00:52:53]:
I would rather you learn from my mistakes.
Jay Conner [00:52:55]:
Yes. And as we, as we said, for goodness ‘ sake, if you’re starting work with somebody that’s done it. Do you know about typical FHA rates? Mortgage rates are lower.
Matthew Porcaro [00:53:10]:
Yeah.
Jay Conner [00:53:11]:
Than conventional rates. Do you know, on average, how much less a 203k rate would be, say, from a conventional rate?
Matthew Porcaro [00:53:21]:
So with my lending team, what we’ve seen very recently is it’s, it’s truly about the same, it’s about the same as a regular FHA rate. You’re talking maybe an eighth or a quarter pointmorer,e and usually we do that to favor something else. But no, they’re, they’re pretty much the same as a true as. So if you see what an FHA rate is, you could expect it to be that or maybe an eighth of a point higher. It’s really about the same.
Jay Conner [00:53:47]:
Got you. We’re going to wrap up Matthew here with my last question, and that is whats your coaching and teaching services like for people that really want to learn more? We told them how to get in touch with you, but are there different levels to it?
Jay Conner [00:54:05]:
How do they learn all about this?
Jay Conner [00:54:07]:
Sure.
Matthew Porcaro [00:54:08]:
So like I said, you know, I made it my mission to just put as much information out there as possible. My YouTube, everything like that. I do work with clients personally, though. I do have a coaching program and process. I work with people in my guarantee when I work with them, as I work with them as long as it takes to get that first 203k deal done,e so they can springboard into the next. They can apply@the203k way.com. And basically, the way it works is like you said, I put the information out there, and they could do it. You know, it’s not like I, I try to hide it, but if you want to, if you want to do it as you said, with raising private money, you want to make sure someone’s, someone’s hanging out behind you.
Matthew Porcaro [00:54:46]:
I always say if, you know, if you’re learning how to, how to fly a helicopter, you don’t fly a helicopter alone. You usually have a co pilot that’s flown a hundred thousand hours next to you. Not because you need, not because you can’t do it alone, but because there’s a lot at stake and you want to make sure that for sure that there’s someone just over-looking your shoulder, making sure you’re not doing anything crazy, and really making sure you’re doing it in the best way possible. Right. I’m very glad Imadee that heart surgery analogy. I’m very glad that anyone who would be working on my hearts probably spent thousands and thousands of hours learning under someone else who has done it in many ways before they handed off the reins. So that’s the way I do it. I, I make it accessible to everybody, and you know, at the end of the day,y they just have to be the Right.
Matthew Porcaro [00:55:26]:
Fit in the position to do it. I, I very, I’m very hands-on with it because, as you said, I did this for myself, and I’ve helped, I’ve been able to do it myself, helped my, help my cousins do it, my friends do it, and one of the coolest things about real estate for me has been there. It’s really cool to flip a house and get a six-figure paycheck on it, and you know, buy rental properties, and it’s great,t and it is fulfilling. But there’s nothing more fulfilling than helping someone do it, seeing it, how it changes their trajectory. Like you said, from your private money clients that came back to you and said I’m able to, you know, travel now, see my grandkids all the time, man. Seeing what I’ve been able to be a small part in and help people with changing their whole financial future, breaking generational curses, being able to be the some the person that helped them buy their first home when no one in their home has ever bought in their families ever bought a home before. It is extremely, extremely gratifying, and that’s why I keep doing it. It’s just I think everyone needs to know about this, and I’m going to keep helping people as long as I can to, to make sure that they can do the same.
Jay Conner [00:56:38]:
That is fantastic. Well, I tell you, Matthew, I can’t thank you enough for coming on to join me here in private money one more time. Of course, all this is in the show notes, but you can get up and learn all about this from Matthew one-on-one at www.the203kway.com, and also his Instagram contact information is instagram.com the 203k way. Thank you so much, Matthew. What an inspiration you are, and I love your heart, and I love your spirit. God bless you, Jay.
Matthew Porcaro [00:57:17]:
Likewise,e my friend. Thank you so much. God bless.
Jay Conner [00:57:20]:
All right, listen. If this episode has changed the way that you think about finding deals and strategies, restructuring deals, and more importantly,y funding deals the 203k way, don’t keep it to yourself. What Matthew has shared today proves something very, very important and that is on this kind of funding, you don’t need perfect credit, you don’t need deep pockets, you don’t need traditional financing to get started the 203k way, you need the right strategy, the right structure and the confidence to have better conversations about money like we talked about here. So here’s my ask if you got value from today’s episode. Follow my podcast, Raising Private Money. Subscribe Leave a Review Give me five stars because it’s those reviews that help us reach more real estate investors who are stuck, frustrated, and only one breakthrough away from their next deal. And share this episode with one other person that you hear them saying, I just don’t have the money to do the deal. This just might be the episode that changes everything for them that you share the episode with.
Jay Conner [00:58:36]:
I’m Jay Conner, the Private Money Authority. This is Raising Private Money, and I’ll see you right here on the next episode, where we’re continuing to show you how to fund your real estate deals without relying on banks, hard money lenders, or anything traditional. God bless you. I’ll see you right here on the next Raising Private Money.
Narrator [00:58:56]:
Are you feeling inspired by the knowledge you gained in this episode? Then head over to www.JayConner.com/MoneyGuide, that’s www.JayConner.com/MoneyGuide, and download your free guide that shares seven reasons why private money will skyrocket your real estate investing business right now. Again, that’s www.JayConner.com/MoneyGuide to get your free guide. We’ll see you next time on Raising Private Money with Jay Conner.