ARV= 210,000
Repair= 30,000
Purchase Price= 70,000
70% LTV (Hard Money Loan)
210,000 x 70% = 147,000
10% of 147,000 is 14700 (Closing Cost)
147,000- 14700= 132,000- 30000 (Repair) = 102,300 -70,000 the purchase price = 32,300. My question is where does the 32,300 go? Do this money goes to the buyer at closing?
The 70%LTV figure is the max the lender will go up to, but if you’re below that including your rehab costs and closing costs, then thats it, youre done, even if the total only ends of up being 60% LTV. That extra 10% is just cushion, they don’t give you any extra money.
Example:
ARV=$100K
The most the lender would give based on 70%LTV would be $70K.
You buy for a house @ $20K, + $30K in rehab + $5K closing costs=$55K
The lender would lend you $55K, NOT $70K.