High End Property Loan

I'm able to purchase a high end property at a very low price. I'm looking for financing to fix and flip.

Value is around $550,000, I can purchase for $400,000. Looking for $430,000 to fix and flip.

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Permalink Reply by Mike Haines on August 25, 2014 at 3:31pm

HI Ivel I wanted to make sure you are realistic with your financing request. First it looks like you are requesting 100% financing of the purchase price plus rehab costs is this correct? Is $550,000 the as is value or the after repair value? This will make a difference in calculating how much financing you can qualify for.

Rule of thumb Lending Guideline tips: Most rehab lenders will lend up to 65% to 70% of the ARV, with some exceptions, and can finance up to 80% of the loan to cost, which is the acquisition price plus the rehab costs as long as it doesn't exceed 65% to 70% of the ARV. The difference you would need to pay out of pociket plus closing costs.

Deal Analysis:

$430,000 cost (loan request)/$550,000 ARV = 78% of ARV (a little on the high side)

Maximum loan amount possible based on rehab lending guidelines:

@ 65% ARV = $550,000 x 65% = $357,500

@ 70% ARV = $550,000 x 70% = $385,000

80% of $430,000 (total cost) = $344,000 (within the lenders guidelines and what you can expect to receive for financing)

$430,000 - $344,000 = $86,000 shortage out of pocket expense plus closing costs and third party fees.

Ivel this is a very realistic scenario of what you will see in the market place. If you have money for down payment and closing costs, I have the rehab loan programs available, based upon the above lenders guidelines, to close this transaction. If you have any questions or you are ready to move forward, please email me details of the project to mike@visionglobalcapital.com.