Is this a good loan for a first time invetor
Hey guys there is a company here in Atlanta that gives out loans to landlords and here are the specifics. I would like to know if this could be something good to get into as a first time investor? The company is call Angel Oak Prime bridge, is this a legit company to do business with?
| PROPERTY TYPE: | 1-4 Unit Residential Properties |
| Non Owner Occupied | |
| LIEN POSITION: | First mortgage only. |
| STANDARD TERM: | 6 -12 months |
| LOAN-TO-VALUE ADVANCE RATE: | Up to 100% of the total project costs,subject to 65% of the After-Repaired-Value. |
| DOWN PAYMENT: | No Minimum – See Above |
| CLOSING TIME FRAME: | 5-7 Days |
| RENOVATION TERM RATE: | 15% |
| PERMANENT LANDLORD RATE: | 5% – 9.99% Speak to rep for details |
Here is an example of a Loan that we recently completed-
- Contract Purchase Price On Subject Property – $71,000
- Renovation Budget (Cost Of Repairs) – $80,000
- Subject Property’s Appraised After Repairs Value – $260,000
- Maximum Loan Amount On Property (65% of Appraisal) – $169,000
- Actual Loan Amount – $165,350
- Calculation Illustrated
- Purchase Price – $71,000
- Renovation Costs – $80,000
- Closing Costs – $14,350
The closing costs estimate in this example includes the costs of insurance, taxes, pre-paids and all other closing fees. In this scenario the borrower was not required to pay any money out of pocket in order to complete this transaction thus creating 100% financing on the property.
Now after repairs are completed, here is an example of the second closing to refinance the loan to a permanent 30 year fixed rate mortgage.
- The Loan Payoff – $165,350
- The Interest Rate – 5.125%
- The Monthly Payment – $900.31
The initial loan is refinanced using the completed homes appraised value. The closing cost for the refinance are rolled into the new loan and potentially creating a no money out of pocket loan. The customer in this scenario chose to sell the home.