I found a bank that will loan 80% of future ARV. I find a property and give lender a list of the repairs/updates and he gives it to appraiser. Example, buy for 50k, has 30k worth of updates, ARV of 100k, they loan me 80k. Its is interest only for 12 months then converts to 15-20 year amortization. This is a one time close loan. Can someone tell me how well or if this is even a good loan for rental property. I know my cash flow will decrease to due years amortized, but am I overthinking something here?
Rental Property Investor · Milwaukee, WI · Member since 2019 · 42 posts · 14 votes
6y
Yeah it’s pretty high level but it’s all a learning experience! If something is hard to understand just lean into it and network and study and talk with your family/friends and you will naturally learn. Best of luck
Investor · San Mateo · Member since 2015 · 14 posts · 16 votes
6y
@Cody Burke There is nothing wrong with that loan structure. Please PM me their contact info :)
You mentioned the amortization structure, but when you have a 12-month interest only the idea is you would likely refinance. Remember there are people doing this exact kind of deal you described with a 10-11% hard money or 7-8% private loan. Then they just refinance after the rehab. If the rehab is big enough you can usually use the appraisal value to calculate the LTV in the refinance. If it's not that big, you'll have to wait six months (or sometimes you can join a credit union and refi immediately after the rehab using the appraisal ).