Need Ideas on Rehab

I have found a property that purchase price is about 49k, needs rehab work of about 20k( was given quote of 15k) and arv is between 92k - 115k according to comps for current area. The owner has gotten behind on notes, but place is not in foreclosure yet. I have no working capital, credit score of about 550, have a good idea that conventional method of financing won’t work on this one. Does anyone have any ideas on doing this one?

Do you have money to put down? Will the seller hold a second mortgage for you to take it off their hands? Do you know any investors in the area that might help you out?

Looks like a pretty good candidate for “Hard Money”…

I’m sure they will chime in this morning on this one…


MsClosed Loans,

explain the idea of the seller holding a second on the mortgage. No, I do not have money to put down. And still have a limited knowledge of investors in this area, as far as help goes.

There are several different ways to structure your loan… the first is to find a lender that will give you a 100% LTV (loan to value) or at least allow 100%CLTV (combined loan to value). CLTV is the combined loan amount of two loans which would be the loan from the bank and a loan that you will take out from the seller. The seller does not have to do this but may, if they just don’t want to pay the loan themselves. The catch to this is that the seller can release you from the loan if they wish to do so. Keep in mind that you may not be able to pull this off if there is no equity in the home for the seller to get enough money from the bank to pay off their current mortgage. You might want to get a pay off ordered to know what you’re working with.

Hard money will probably not work out for you.

  1. Most hard money lenders will fund the amount you need for work to be completed but that money is put into an escrow account and only released for work completed and inspected.

So you would need to have some working capital to get started or a flexible contractor who can get paid after works is done in phases.

  1. Most HML are from 65-70% (after repaird value) arv.
    So everything would have to work out perfectly for you.

a. Max loan at 70%
b. Appriasal would have to be no lower than $115k
c. Rehab work to get to that value no more than $15k.

It doesnt happen so often that all the #s come together exactly as needed and there’s little margin with yours. You may need to find a partner or a better property.

Where is this property at? DO you have investment knowledge?