I am trying my first rehab/flip. Contract accepted at $200,000 (estate sale) ; ARV $265,000 (low estimate); Appreciating market; Repair costs less than $10,000. Have reviewed the commercial hard lender ads (65% loan to ARV) 14% interest, 4 points. I am very close in having the $17,500 needed to close with the hard money lender. Credit score above 650.
What other options, other than a hard money lender, should I be looking at. I understand there is a cost to everything, but $16,000 for three months looks a little high, but again that may be the cost of risk. I await the experts.
Look for HML’s that do not make you pay the points up front. Some lend to 70-80% ARV and allow you to wrap points in. The one I use for my investors in Ohio is great, but they have more requirements than most. You need a 640 score and have to go full doc. But, they do allow 80% ARV, 4 points, no prepay, 9 months, and they allow you to wrap fees in with the loan. There must be one out there for your state as well. Good luck.
Some local banks will provide rehab loans to investors up to 80% ARV. The upfront points and interest rates available are much lower than Hard Money lenders.
What state are you located in? Central States can lend up to 85% of the ARV with no out of pocket expenses. I have to have a presence in the state that I lend in.
You mentioned that you are very close to closing with the hard money lender that does 65% arv. I’m not sure your #s work out for that, even bringing in $17,000. If the arv is $265,000, then your max loan would $172,250. That’s ~$28,000 short on the sales prices without even counting the $10,000 for rehab and points. It would appear you would be bringing in more than $17,000.
Most hard money lenders are set up to service specific geographical regions. You havent informed us of what area the property is in. Thinking possibly FL from your user name.
There are a couple nationwide lenders that may be able to help you out with a higher ltv and better terms. Please let us know where the property is.
By the way, please explain your thoughts behing using hard money and not conventional financing. Your score is not that low.
How long have been on your job or self employed?
Would your income be enough to qualify?
If you could use the deposit income on your bank statements over the past 12 months, would that be more substancial?
How about assets? You said you almost had $17,000. Where are those funds coming from? Will that leave you completey asset depleted, no 401k or investments?