Ok, here’s the deal. I have an LLC thats been in business for 9 years. I have a $15k LOC in that company. This company is not RE related but I was going to pull these funds to get my RE company going.
The only money I have to work with is my LLC LOC. There is a property I am looking at, house is listed for $110k. Contractors repair estimate is $30k. Comps for this house is $180k. I can probably get all the repairs done in 4-6 weeks and should have no problem selling as it is in a very HOT neighborhood.
My question is this, I need another $15k for the repairs plus another $5k for unforseen repairs etc. What is the easiest and cheapest way to get these other funds? I was thinking of refinancing the house immediately to get the rest of the funds but not sure what my cost and fees would be to do that. If I get a hard money loan, I can’t refinance to get more money right? What other angles could I work?
Any other ideas or suggestions? I was thinking about getting another LOC for my 9 year old LLC but would rather not.
I’m new to the Real Estate venture and this is my first flip. Thank you in advance.
P.S. my CS is about 630 because I just bought a car and got the LOC.
I have a couple of questions for you…
1 - Why not just try and wholesale it to build up your bank account for future profits. If this is your first real estate attempt rehabbing a property might not be a good idea.
2 - Unless you are purchasing the property out right - which I don’t think you are, you will need to go to the bank to get your loan correct? What about the costs associated with that? You will also have a higher insurance because the property will not be owner occupied. Just some extra costs to think about.
3 - You say the comps are $180K. How long did it take for those properties to sell? Are you going to sell it yourself or are you going to list it with a realtor. If you go the realtor route you will have those costs to think about.
I am not trying to ruin your intentions with the property, I just want to point out some things for you to think about.
Brandon
First off, I want to thank you for your questions and advice. I never reject any kind of advice or suggestion.
-
My passion lies in the fixing of things so wholesale was my last resort. I’ve done months of research in the rehab section of REI. I have a formula that I use to add on for those unexpected dilemnas. My entire team has rehabbing/flipping experience, so all in all, I feel pretty comfortable with all the stages of the project.
-
More than likely, I’ll be getting a hard money loan. I have a lendor that will finance 100% if I show them all the numbers on the project. I have all my carrying costs calculated
-
The comps we’re in the neighborhood of $185 and $200, all of which sold within 2 months. I low-balled it by calculating $180. Yes, I have a realtor that is starting me out at 6% list and sell…with a reduced rate of 5% of 2nd flip.
So really the only thing I am lacking is $15k to cover all my expenses. There has got to be some creative way for me to work in another $15k.