I got information about a rehab/fix & flip program and wanted to know if this is a good program or if anyone knows of something better. Here is general info:
one time credit check per year
one time application fee per year-regardless of how many rehabs are done
no payments for 6 months
loan term 6 months but can be extended to 13 months at 15% interest only payments and 1% extension fee for every 3 months extended
funding within 2 weeks once approved
up to 70-75% after repaired value used
4-7 points: depends on credit & amount put down on project
Please reply if there is anything better out there
The points on your program are way to high. If its a true rehab loan my contacts charge 2 points at 65% ltv, and 3 points at a 70% ltv. I only charge one point for my time, making it a TOTAL of 4. Seven points is high way robbery!!!
There’s a few banks that do construction/rehab loans. I think they roll the interest into the loan. Typically they’re based off the prime rate like prime+1 or prime+2 which would be 9.25 or 10.25. Then the broker would charge a point or two and that’d be about it.
With your program, there’s some nice bonuses, but it seems like you pay through the roof with points.
Oh and the points we’re talking about are percentage points of the total loan. Borrow 200k and 4 points is $8k, 7 points is $14k.
BTW, what kind of numbers are you thinking about on your fix & flip? I see several on MLS all the time. Currently working on an offer for one right now. Guy bought at 315k, tried to get $420k, now he’s down to $340 and still hasn’t sold. I think he has about 20-30k into the project and we just found out his roof is leaking. The market here is just not a good fix and flip area. Appraised value and actual sale price are two totally different things.
Lenders and hard money lenders vary by area, the best way to find out what is good and bad in your area is too network with other investors and find out who they use. Dont try to reinvent the wheel. I do this with everybody who I use and im always looking to save more and more money (carpetlayers, drywallers, painters, lenders, etc).
If you want to know where investors go ask investors who have already made the mistakes so you dont have too.