I found a bank owned property that i want to put a bid on. My bid would only be for $30,000 since it needs about 25,000 in rehab .I think the arv would be about 88,000. I spoke to a mortgage broker today about financing the purchase and rehab funds. I told him i wanted to do a loan based on the after repair value of the property. (88,000) only wnated to borrow70% of the arv (61,600). This would give me enough money to buy for 30000 and rehab for 31600. He told me they dont do these types of loans anymore. Should do an equity line of credit on my personal residence. of wich i am already at 100% ltv on. what are my next steps to get this deal done. thanks for your help
I’ve never seen a mortgage broker do these types of deals. You need to find a small local bank that keeps their loans in their portfolio. It is always best if you know someone of importance at the bank (president or vice-president). If you don’t know one of these people, maybe you can get an introduction from another successful investor at your REIA.
Also, get all of your ducks in a row before going to the bank.
That would be ideal if i new someone that high up at a bank. unfortunatly i dont. This home wont last long and i wanted to put anoffer in in the next few days. I guess i will just call some local banks and tell them what i want to do and if they can do this. By getting my ducks in order do you meen taking my business plan to the bank , asset and debt statements. credit report, work history, and anything else i could use to show i am serious and that this would be a good investment for them. I think they would like the ltv ratio i am using if i am correct with the arv since i am not a proffesional it is only my opinion of value but i think i have a handle on the market value of property in my area. should i ask to talk to the loan officer or should i make an apointment with someone higher up the food chain. thanks
There are people on this forum that can assist you with this (and yes, some of them are even mortgage brokers).
You need a hard money lender. Regular banks dont do loans on after repair value. They want to do loans on pretty houses that have already been repaired.
Depends on the bank. My local bank does loans based on ARV. They will loan 80% of the ARV. I am closing on my third property Monday with that same loan deal. Check around. You may be surprised what some banks will do.
Establish a relationship with a local bank. Mine does 80% ARV and runs it through their commercial division. I’m closing on my third rehab with them soon. Local banks have more flexibility and will work with you if you can get to know someone. Ask your realtor or other investors in your area for a referral and take them to lunch. You’d be surprised what they can do for you.
My mortgage broker does loans based on ARV. They will loan 90% of the ARV. They use a 2 time close with private money for eth initial purchase and rehab and refinance out after 90 days to a bank (Bank of America, Countyrwide etc.). This is how I did my last 5 houses.
bluemoon does your broker do loans nationwide? I would be interested.
what bluemoon is doing sounds like the equivalent of going with a HML then refinancing.
bluemoon, how are the initial rates and closing costs on that? i’m curious as to if the out of pocket costs are comparable or not.
Yea, Bluemoon…hook me up if he will do loans outside his area and the rates and service are good!
Credit Union’s will sometimes do them and hold them in their portfolio. That is how I did my first rehab. I borowed 104k on a property I purchased for 79k. ARV was 159k
I could not find this list to post. My mortgage broker does all of Texas. I am not sure if he goes out of Texas with this deal, but you can ask him yourself. http://www.rayhuntmortgage.com/