Hey all.
I 've found a duplex that is decent price and in pretty good shape. It may some minor work ( under $5000 ). my question is this. It's an REO and if I can get it for well under its FMV, would it be wise to use a HML or Private lender and then refi in 6 months or so? I don't have the Down payment right now.
Most hard money lenders will only lend 65 to 70 percent of the purchase price. Some will loan 65 to 70 percent of the ARV or after repair value which typically means some money out of pocket. How much is this property undervalued? In what state are you living? The easiest way is to make up the downpayment with a loan on another property that you own with a refi or a HELOC. Just make sure this property will cash flow and not put you in a negative cash flow situation. Check out my website www.masterpropertyinvestor.com
Calculate the costs of borrowing hard money to see if it would be worth it. You talk about refi in 6 months…does this mean that your overall plan is to keep it as a rental? Otherwise, if it’s really just minor work that is needed you may be able to get in and out within 6 months (depending on several variables, where you are located, the current market at that location, how you price it, etc. etc. etc.).
Chris