Tucson AZ 40 Property Package
I may get a shot at doing a rehab project with a package of properties being liquidated in one lump from a trust. I’ve mostly done my real-estate investing with raw land and land development issues. Some very complex and technical. However, I’ve not done any rehabbing so I wonder if anyone has any advice for me to do this project. I expect I will be getting these properties for 50% of their market value. What kind of loan should I expect to get on so many properties? If I decide to partner up with other rehabbers, how shall I go about it?
Here’s an example of a loan I would like to get. Please let me know if I’m being realistic:
Portfolio comes in at $8 million (100% market value)
My purchase price will be $4 million (50% m.v.)
My loan amount will be $5.2 million (65% m.v.)
Difference of $1.2 million held by lender to pay…
$4k - loan fees (approx)
$156k - 3 points
$1,040k - (20%) 2 years interest pre-payment at 10%apr
Loan due in full in 2 years.
Early release provisions on individual properties so they can be individually retailed out at any time with no early payoff penalties. I may feed pieces to other rehabbers and perhaps a ready-made loan can be prepared to piece this out. Thus, additional loans can be spawned from this one and increase lenders gains.
If not pieced out to other rehabbers first, the properties will get retailed and/or rented out as quickly as the rehab work is completed.
The loan will be repaid by either selling the properties outright (with proceeds of sale, minus rehab expenses) going to pay off the lien or by getting long-term conventional financing and retaining the properties as rental income generators.
I’ll probably sell off all the single-family homes and retain multi-unit properties as rentals and have them managed by a local management company.
If needed or if it gets me a lower interest rate I can put some of my free and clear land (86 development acres just south of Prescott with year-round creek and lots of pines) as additional collateral. I would put cash into the deal but I want to use those funds for the rehab efforts.
Thanks for all who provide wisdom and guidance,
Jason Wharton