So we have this friend that wants to unload a property for 40K, renovation costs are coming in at 56K. The CV is 98K and the ARV is around 122K. Because we are new investors, no one wants to lend on a rehab that costs more than the purchase with this close a margin. We are wrecking our brains (with the limited knowledge we have) on how to close this deal without bringing in other investors. The Hard Money Lender we are approved with is comfortable with a 90K purchase price, lending 75% LTV which will get us where we need to be in order to do the rehab in phases, because we can contribute ~5K/month to holding and rehab costs after the initial investment. What options do we have? We have an LLC but it is just on-paper at this point, can we use this to close the deal and draw down funds at a 90K purchase price? Maybe do seller-financing from the LLC? I am out of ideas here, any help would be most appreciated!
Wait, you want to buy a place for $40k that needs $56k of rehab? With no experience?
That 'may' be worth 122k?
Why do you want to do this? Sounds like not just tight, but like it doesn't make any sense. Even in this market there's better deals to be had....
But it's the deal I have.... :) @jim goebel
@Kendrise Colebeooke Doesn't sound like a good deal be it your only one or not.
Patience is needed!
Didn't do the deal. Another investor offered 15k over our offer. Lessons learned: Keep contracts handy, get signed first then do the rest of the work. And, don't try to make something work when the numbers don't......thanks for all your advice!
In the future, just so you are aware, there are renovation loans for the first 4 financed properties that you have - including subject. Homestyle is one of them - but the property would need to be in your personal name.