I live in Long Island and I’m interested in buying a property to flip and sell, REO houses in the area I’m interested in are between $100K - $120K and they sell for $220-250K. I’m looking for a HML who can finance this project based on ARV. Does anybody know where to go? I’ve been looking around and it seems they lend 65% of the purchase value which is too low even with enough money for repairs.
I really appreciate if somebody can get me in the right direction.
You’ll need to have about 10% of the amount you want to borrow in reserves and have a debt to income ratio of no more than 40%. What zip code is it in and what type of property is it? Also what is the exit?
Typically all hard money lenders are in that LTV range, especially with the market situation. Have you called around and talked to each lender individually because some lenders are flexible with their guidelines and if you’re getting it for that cheap, they might lend to you. Also consider using private or angel investors to get the down payment and go 50/50 on the deal until you get the money to go out on your own.
What part of LI are you talking about…The only areas that will yield these kind of deals is Wyandanch,Brentwood,Hempstead,Mastic (area),New Cassel etc…
Hard money lenders rarely lend on ARV anymore…Reason being for a lender it shifts the risk of the deal in the favor of the borrower making it a dangerous situation for the lender…Example…You find a home at 100k but the ARV is 220k (lets assume)…You find a HML to do a %65 ARV loan ,this moron lender gives you $140k+ at closing…You are now giving this (borrower) person $40,000 reasons to bail on the project and stiff the lender…Also escrowing for rehabs (small) is time consuming…My constant argument on this matter is if you were the lender would you lend on such a scenario…Lending hard money isnt based on the honor system,its based on collateral,skin in the game,aka US currency of yours involved in the project…
my experience is that hard money lenders do lend on ARV, but they take into account the credit and reserves of the borrower
its not solely based on the property, and they won’t hand you more than the purchase price, they will pay the purchase price at closinh (you pay closing cost), and will escrow the mount in your repair budget for the rehab (up to the max ARV),but they don’t just hand you 70% of ARV at closing
the only time they ‘give’ you money is to pay you back for rehab work done