Question about finding 100% financing.
So my question is if I find a deal and get a hard money loan for 70% of the ARV but that much doesn't cover all the money I need for the rehab what would be another way to get money other than just saving from my job? I feel like a second hard money loan would be a bad idea, or is the 70% usually enough to cover everything?
credit card 0% financing and sell house before a year. If your cost to fix is less than $15K
Here is an example using each type of loan product available to you since you are a W2 employee. Each has a 0% or low money down element that allows for you to purchase while financing the renovations:
VA: Eligible for a 0% down Purchase price. Although highly underutilized by the veteran community, a solid option to get into RE Investing as a veteran/active duty is to use the VA Renovation Loan. Identify a property that needs work on the MLS and purchase as a primary residence (which enables the best possible financing terms) - move in & make repairs (that can be financed into the loan). The VA Renovation loan requires you hire contractors to perform work on the house that you must coordinate. You must essentially be the quarterback for the whole operation and it allows you to manage the entire process. The lender will push you to deliver results based on timelines as set forth by the guidelines. You gain a ton of experience while also having a safety net of other parties interested in the completion and success of the purchase/renovation. This loan is acceptable for a multifamily purchase as well, up to 4 units.
FHA : Similar to the VA Renovation Loan, FHA offers 2 types of Renovation Loans that fall under its 203(k) product: Standard and Limited. The main difference is that Limited = repairs less than $35k. Standard = Repairs greater than $35k. Standard 203(k) requires a HUD inspector to sign off on the repairs, a Limited 203(k) does not. Like the VA Renovation, you will quarterback the entire renovation process and you will have other parties pushing you along to meet deadlines. The repairs can be financed into the loan. Additionally, you must live in the property as a primary residence - which enables the best possible financing terms. FHA loans require 3.5% down, in addition to closing costs.
USDA : Much like the VA, USDA is a 0% down loan. This too, has a renovation product but the structure of it is still in the works with a couple lenders. The repairs can be financed into the loan. The best thing about the USDA loan is that it's open to everyone and you don't have to be a veteran. This loan type, however is very specific about income, property type, and property location however. Each county in the US has a max allowable income limit that the investor can make. Being that $50k is the investor's income, they will likely qualify in any county. The property type must meet the requirements of the guidelines, as well as the allowable locations in the US, located on this map: https://eligibility.sc.egov.us... The investor can move into this home, fix it up, then depart the year after.
-
Lender
- (707) 595-7574
@Clint Vonburg- if the property will be owner occupied - you can try to get a FHA rehab/ remodel type loan ...
I'm actually self employed via door dash and started full time this year so I don't have enough proof of income for a conventional loan which is why I was asking about hard money loans. Otherwise I was gonna refi my house and use that to pay off my debts then start my investing journey.
@Clint Vonburg how do you feel about moving out of your own home and renting it out? Maybe move into a cheaper apartment.
Or rent out rooms in your house. Either way, you are beginning the journey of establishing your ability to become a landlord, which opens up opportunities within loan guidelines, depending on the loan product you choose.
-
Lender
- (707) 595-7574
#3 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
- Investor
- Austin, TX
- 5,507
- Votes |
- 9,861
- Posts
#3 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
- Investor
- Austin, TX
If that %70 doesn’t cover the full amount I’d re evaluate the deal
Quote from @Eliott Elias:
If that %70 doesn’t cover the full amount I’d re evaluate the deal
Yeah after I posted this I realized it said 70% of the ARV which means I have to make it work with the 70% that I get from the loan. Now my main problem is trying to find comps nearby which I learned on redfin you can zoom in and see what the other houses nearby sold for but those can't be too helpful because the houses could of been sold like back in the 90's or something.
Quote from @Erik Browning:
@Clint Vonburg how do you feel about moving out of your own home and renting it out? Maybe move into a cheaper apartment.
Or rent out rooms in your house. Either way, you are beginning the journey of establishing your ability to become a landlord, which opens up opportunities within loan guidelines, depending on the loan product you choose.
Well I do plan to rent out my house but i was just gonna do the whole house hack thing with it first. Because i know that i could easily make $400 to $500 in cash flow if i rent out the house i live in now then i could just live in the new investment property for a year while looking for new deals.
#3 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
- Investor
- Austin, TX
- 5,507
- Votes |
- 9,861
- Posts
#3 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
- Investor
- Austin, TX
Quote from @Clint Vonburg:
Quote from @Eliott Elias:
If that %70 doesn’t cover the full amount I’d re evaluate the deal
Yeah after I posted this I realized it said 70% of the ARV which means I have to make it work with the 70% that I get from the loan. Now my main problem is trying to find comps nearby which I learned on redfin you can zoom in and see what the other houses nearby sold for but those can't be too helpful because the houses could of been sold like back in the 90's or something.
Work with a realtor on this. They are great resources