For the seasoned investor out there - what is the best way to go about financing an REO.
I am reviewing a property that I have a hold strategy of 180 days: Therefore, I would need reserves + purchase price - and there would be tons of equity at the offer price.
Based upon your suggested purchase price (160K), rehab costs (10K) and ARV/FMV value of 215,000, you would need an ARV based loan that would allow for 80% (your scenario comes to 79% when you add both purchase price and rehab costs).
There is a conventional investor rehab loan program that allows 80 ARV; but you must have a mid FICO of 641 or higher, willingness to go FULL DOC or Bank Statements, manageable DTI, etc. to qualify.
Your ARV request exceeds the allowable limits of most hard money lenders (65-70 ARV is the norm; 75 ARV is available with inward investment), so this won’t be an option based upon the numbers you presented.
Most conventional loan programs will only allow for 2-4% cost to cure; I believe hard money is a valid approach when you have a cost to cure in excess of 6%.