The Little-Known Loan That Helped Me Turn $9K Down into $150K in Equity

**Henry Washington** (0:00)
Matt wanted to start investing in real estate to generate some extra cash alongside his day job. But in his expensive Northeast market, he couldn't just find cheap enough properties to make it work. Even beat up multi-families were too pricey to house hack until he discovered a little known loan that allowed him to put down just 3.5%. But this wasn't just any typical FHA loan. Matt was able to finance in his entire renovation, his closing cost, and his first 6 months of mortgage payments too. He only had to bring $9,000 to the closing table. By the time he'd renovated that house, Matt had created over $150,000 in equity and launched a game-changing investing career. All thanks to a loan that most investors are completely unaware of.
What's going on, everybody? I am Henry Washington, and I'm here with my co-host of the BiggerPockets Real Estate Podcast, Mr. Dave Meyer. And our guest on the show today is Matt Porcaro from Long Island, New York. You may have seen his post on Instagram. He is at the 203kway on IG, and today we're talking all about 203k loans, which is arguably one of the best loans for new investors looking to build some serious equity and scale. Matt's going to share his own story of how discovering the 203k loan allowed him to buy properties he never could have afforded otherwise and generate huge equity by rehabbing them without taking on high interest loans. So let's bring on Matt.
Matt Porcaro, welcome to the Bigger Pockets Podcast.

**Matt Porcaro** (1:39)
What's up, Henry? How are you? Thanks for having me.

**Henry Washington** (1:41)
Good, man. Good to see you again.

**Matt Porcaro** (1:43)
Yes, likewise, likewise.

**Henry Washington** (1:45)
All right, man. Well, let's get started. And how we always start this is tell us a little bit about your background and what got you into real estate in the first place.

**Matt Porcaro** (1:53)
Yeah. So I grew up blue collar family. My parents had a little mom and pop construction business. And suffice to say, saw a lot of ups and downs with that. So growing up in that environment, I think from a really young age, I put a lot of emphasis on money because I saw how money, just how it affected their life. If money wasn't coming in, I felt it, it permeated in the house. You know, love my parents, but it permeated from a really young age. And when you're seven years old, you don't realize that kind of pre-programs you for being maybe not obsessed with it, but just knowing that it's important. So fast forward, luckily enough, was able to find work in the city, in New York City. And very quickly, soon after that, realized that this didn't seem to be exactly what it was all cracked up to be either. This good job with good benefits. I was commuting an hour and a half both ways on the Long Island Railroad every single day. So three hours a day, waking up at 5 a.m., working construction in the city, coming home, eating dinner, going to the gym and going to bed. And that was my life. And it was beating the butt out of me for the first couple of years. So I kind of started just going down the rabbit hole of just exploring and listening to podcasts like this and just going on. And one day I was working through the city and you know how in New York City, they have guys that sell books on the side of the street, like used books, everyone's got a hostel there, right?
And I saw a little book there that you probably never heard of before called Rich Dad Poor Dad and I heard really good things about it.
No, I make the joke because it really, I picked it up, I heard good things and suffice to say, it really changed my life in the sense of from a kid growing up in a blue collar environment and a blue collar atmosphere, learning that real estate is a vehicle that rich people use to build wealth and everything.
That was a turning point for me. But Robert Kiyosaki talks a lot about buying multiple houses and everything like that. As I mentioned before, I live in New York, one of the most expensive, insane, highest taxes places in the world pretty much. So it was funny. I was like, all right, Robert, that's great. But you talk about buying multiple houses. I don't even know if I'm going to be able to afford my own house. I see my parents struggle with their mortgage. I'm going to need $100,000, $200,000 just for a down payment. So suffice to say, there's a lady that runs the local area around here, still does. Her name is Melissa, and she was someone I respected. And I pulled her to the side one day and said, hey, Melissa, hey, I'm Matt. In my later 20s, I'm just looking to buy something. But I don't have a lot of money. I don't have a lot in the bank. I'm saving as much as I can. I think I have a decent job. But I can't afford a house. What would you do if you were me in my position? And she told me, she said, if I were you, I would use what's called the FHA 203k loan. I was like, OK. I don't know what that is. I've never heard that. She's like, well, it's an FHA product. So it's an owner-occupant, low down payment product that allows you to buy a house. But the 203k version also allows you to buy fixer-uppers. And it also gives you all the money you need to repair it. So basically what you want to do is do a live and flip, buy something that needs some work, renovate it using the bank's money. All you have to put down is three and a half percent. And three and a half percent, I was like, oh, that's really attainable for me. That seemed, it was 150,000 versus 10,000 was like, oh my God, okay, I have a shot at this. So she told me this whole thing. I'm like, wow, this sounds incredible, amazing, awesome. This is everything that I've needed because low down payment, I could find something, you know, here in New York, basements are really popular. She said like, you live in the basement, rent out the upstairs. That was the first time I really ever heard about the concept of house hacking.