Hard money or reconstruction loan?

So here is the scenario:

Purchase price: 185k
Repairs: 70k
ARV: 320k

I want to sell this house w/in 6 mos. of purchase. However, I do not have money for a down payment or closing costs. How should I proceed? What are the downsides to both kind of loans( hard money/ reconstruction)?

Any input is greatly appreciated!


How are you going to pay for repairs with no money?

Brookeview financial could probably fund this loan. They do require 15% down but they cover all closing costs. I don’t know about rehab loans, I don’t mess with those (ben carmona seems to love them though if you want to try him).

Thanks for the name drop Mark.

As he mentioned, ATL, I may be able to give you some info here.

The first place to look for these rehab loans would be some of the smaller local banks. You’ll want to speak to their commercial lending department. It will be important for you to have everything on paper and well laid out. Not all local banks may do this type of loan so you may be calling around a bit. This would be the cheapest type of loan.

If you can’t find or they will not do because lack of experience or personal criteria, it may be possibe to do a conventional rehab loan. You never mentioned anything about your credit, income, or assets. Some lenders will require you to have a general contractor as well. These loans could take from 4-5 weeks.

One other option would be to use a hard money lender. Credit is not a factor. Income and assets are not verified. 70% ARV is the norm. In most cases the costs, payments, fix up, and purchase can all be covered. If 70% isn’t enough, the seller/anyone can hold a small note for the shortage. The cost are higher on this type of loan but they can fund quickly and easily.

Thanks for the information on hard money loans…I am a newbie, joined a RE Investor Club in my area, and I am curently searching for a mentor who specializes in Pre-Construction Investment, Pre-Foreclosure, Banks and HUDs. I am also reading all the available information in print and online.

National City and First Horizon both have good rehab programs as well.