New..In need of advice..

I am planning to get started in the Rehab business, and have many questions. First, here are the basics of my situation…

*Plan to start after the first of the year
*credit score mid 500’s
*Bankruptcy discharged a year ago (3 months before filing score was 720+ :()
*will have 10,000 in savings to start

  • planning on initial starting price range to be 30,000 to 40,000 (list price)

I do not plan (at least in the beginning) to purchase expensive homes to rehab, because I am operating under the assumption that with a score of mid 500’s, I won’t have the option anyway. I feel very confident when it comes to nearly every part of the rehab process, other than the financing-for obvious reasons. I am currently on the way to improving my credit score, but do not want to put off getting started. I have started researching HML as a possible means of financing. These are my questions:

  1. Are there HML that are willing to loan to someone with a credit score this low?

  2. Will they loan an amount that small to purchase a property?

I will admit that I do not know alot about HML, and know nothing about private lending. ANY advice on where to begin is VERY much appreciated!! Thanks…

very glad to have found this site

You can call a guy named Jay. He is HM resource. 10% down with credit scores of 430 which is awesome. I’m on my final warning with REIClub so if you like you can request the phone number. I’m sure with a mid 500 score he can get you some great options.

Well you could start by lerning how they operate, the terms they have, the interest rates, if they have any pre-payment penalties(some do, some dont)-I guess what I’m trying to say is do research throughly.

Here’s some basic cost info

Interest rates: 12 to 18 percent
Balloon payment: typical, usually due after 1 or 2 years
Loan position: must be a first mortgage, not second
Maximum loan-to-value ratio: anywhere from 50 percent on up to 70 percent
Points: 4 to 8

Assuming the worst rate and point structure possible, a $100,000 loan could cost as much $8,000 up front and $1,507+ a month in principal and interest payments.