Question about a financing offer

Financing, Hard Money Lenders, Private Money
1

I have a property under contract for $103,900, I have a lender who already agreed to lend me 70% and I am trying to borrow another $42,500 to complete the purchase and rehab of the property. My exit strategy would be to sell the property just under market value at $150,000. Terms for the loan that I would agree on would be 8% interest only for 9 months and a balloon payment of $52,500. Does this sound attractive enough to entice an investor? or should I try and partner with someone and split the profits from the resale? Any suggestions on how I can get this deal done?

Jon

2

Hi,

I generally line up or have my financing / partners set prior to actually financing a property!

$150,000 FMV / ARV
$ 45,000 Investor 30% discount
$105,000 Purchase Price
$ 11,500 Rehab / Remodel Cost
$ 93,500 Adjusted Purchase Price

Your paying about $10k more than would be ideal for price in this situation!

I think to make it reasonable for an investor you need to offer up a 50 / 50 deal.

The problem will be actually finding an investor in a few weeks who will participate in this deal!

Good luck,

            GR
3

Why not ask the seller to finance the 42k for nine months? Many sellers are happy to partially finance a sale if they don’t have to wait too long to get all their money. Nine months is hardly a long time in most instances, especially if the seller is receiving the bulk of his money now. I always ask the seller to finance all, or part, of the transaction. So, ask for it.

4

Hi javipa,

I thought about asking the seller for a second, however the seller is about 20 months behind on payments and not a lot of equity. A seller second wouldn’t help much.