I am a Canadian citizen, and have deals in the Michigan area. I have properties that are 30%, 40% and 1 or 2 that are 50% below market value. I am looking for a good hard money lender, who can give me a loan to purchase the home, and I will take care of renovations. Or if I need help with renovations, I will let the lender know. If any investors wish to work these out as assignments, we can do that to.
Are There Any Hard Money Lenders, Willing To Invest In Michigan??
There are hard money lenders to assist you.
If you are talking about a low ltv that is based upon the current as-is value then there should be no need to escrow in funds for the rehab. 65% of the as-is value will be the norm.
However, if you ltv examples were being based upon the after repaired market value then rehab funds must be escrowed. Anytime the lender loans upon the arv, they want to make sure the funds for fixing up will be available throughout the process. If you have the funds, fine, you would need to deposit them into the escrow account. Again, this is only if you are using the arv to come up with those low ltvs. 70% of the arv will be the norm.
So lets say I dont have enough cash to do the rehab, out of my pocket, would I try to get 70% of the ARV? Or should I not try to take the deal myself at all, and just try to get another investor to take it, and pay me a finders fee / assignment?
If you are basing the ltv off of the after repaired value then you will always need to make sure that the funds needed for fixing up are in an escrow account. A hard money lender will typically loan up to 70% of that arv. If you have some funds for fixing up and want to reduce your loan amount with the lender, then you can add some of your funds to the escrow account. You can have a lower ltv with the lender, that’s not a problem. Actualy better for you since your paying less interest.
One thing to also remember. The funds in the escrow account are not released out in advance. They are there only for reimbursement of work completed and inspected. So you would also need some working capital upfront or flexible contractors that will work in phases. Once a phase is complete, the lender will send out an inspector. If the work is done then they wire funds to you within 48 hours.