Matt Picaro, a Long Island-based real estate investor, has built a three-unit portfolio using FHA 203K loans as his primary financing vehicle. The 203K program allows borrowers to put down just 3.5% while financing both the purchase and renovation costs into a single mortgage, a structure Picaro has leveraged repeatedly to scale his house-hacking and flipping strategy.
The 203K loan works by combining acquisition and improvement costs under one mortgage. This eliminates the need for separate construction financing or additional capital between purchase and rehab phases. For investors on Long Island, where entry prices run higher, this means controlling multiple properties without the traditional 20% down requirement.
Picaro's approach targets owner-occupied deals, meaning he lives in one unit while renting others. This qualifies him for the lower down payment while generating rental income to cover his mortgage. House hacking accelerates equity build while flipping provides cash for the next deal.
The Long Island market presents both opportunity and friction. Property values sustain strong demand, but acquisition costs are steep. The 203K removes a key barrier. Instead of waiting to accumulate 20% down on a $400,000 property, Picaro puts down $14,000 and finances $364,000 plus renovation costs.
For buyers in similar markets, the 203K opens scaling paths otherwise blocked. The tradeoff involves FHA mortgage insurance (typically 0.85% annually on the loan balance) and stricter appraisal standards. The lender approves all contractor work, slowing renovation timelines compared to cash renovations. Properties must meet code; cosmetic flips don't qualify.
Long Island landlords watching Picaro's strategy should note the math: modest down payments multiply purchasing power. Three units using 203Ks required far less capital than traditional financing would demand.