Need help seeking BRRRR lender for my deal.

[James Daley]

Good afternoon,

I have a slightly unique investment opportunity and I am searching for lending. Please let me know if you have any solutions. 

The property that I am under contract for encompasses four houses across three adjacent lots. The purchase price stands at $229,000 with an estimated rehabilitation cost of $50,000. The after-repair value (ARV) is projected at $428,000, potentially reaching $477,000 if sold individually.

Two houses require rehab, while two are rental-ready. My strategy involves repairing and renting all properties, anticipating a monthly rental income of $4,200 once all are tenanted. Income generation is expected to commence for two houses during the rehabilitation phase upon securing tenants. I was told by the neighbor that 3 houses on the same street were bought by a realtor and rehabbed and now rent for $1600 each.

I've already paid for and attended the inspection last week as well as paid earnest money so I'm currently $2000 into the deal. However, I've encountered a setback as my initial lender has withdrawn (100%LTV), necessitating the search for alternative financing. As a relatively new investor with ownership of one duplex, my aim is to transition to property rehab and the BRRRR method. After a year of research, preparation and saving, this opportunity—featuring four houses within two miles of my current home—appeared ideal. The issues I have run into are lenders not wanting to take a chance on my experience level and also the down payments being out of reach. My credit score is good at 730, and my monthly income shouldn't be an issue either. Lacking sufficient funds for a 20% down payment, I am exploring lenders offering 90%-100% LTC to minimize my upfront investment. With $40,000 in cash reserved for contingencies and closing costs, a 20% down payment would be just out of reach for me. I appreciate your consideration of my deal and welcome any solutions you may have.

Thanks - James

[AJ Wong]

HI James. Sounds like a great deal! Check in with @Joseph Chiofalo they have high LTV Fix & Flip financing available nationwide and do a lot of lending in TN and the south in general. Good luck.

[David Bilandzija]

@James Daley You'll need some 'skin in the game' on a deal like this. I wouldn't focus to narrowly on the possibility of 100% LTV/LTC given your experience level. Go in with the mindset that a down payment will be needed for the acquisition.

Take advantage of the next best thing... Investors in your position can perform a fast rehab and in as little as 90 days refinance out of the interest only fix and flip loan and into a DSCR loan, 30 yr fixed product in the 7-8% range - cash out is available up to 75% of the appraised value at the 90 day mark.

[Joseph Chiofalo]

Hi James, 

Do you own any other real estate at the moment?

[Erik Estrada]

Quote from @James Daley:

Good afternoon,

I have a slightly unique investment opportunity and I am searching for lending. Please let me know if you have any solutions. 

The property that I am under contract for encompasses four houses across three adjacent lots. The purchase price stands at $229,000 with an estimated rehabilitation cost of $50,000. The after-repair value (ARV) is projected at $428,000, potentially reaching $477,000 if sold individually.

Two houses require rehab, while two are rental-ready. My strategy involves repairing and renting all properties, anticipating a monthly rental income of $4,200 once all are tenanted. Income generation is expected to commence for two houses during the rehabilitation phase upon securing tenants. I was told by the neighbor that 3 houses on the same street were bought by a realtor and rehabbed and now rent for $1600 each.

I've already paid for and attended the inspection last week as well as paid earnest money so I'm currently $2000 into the deal. However, I've encountered a setback as my initial lender has withdrawn (100%LTV), necessitating the search for alternative financing. As a relatively new investor with ownership of one duplex, my aim is to transition to property rehab and the BRRRR method. After a year of research, preparation and saving, this opportunity—featuring four houses within two miles of my current home—appeared ideal. The issues I have run into are lenders not wanting to take a chance on my experience level and also the down payments being out of reach. My credit score is good at 730, and my monthly income shouldn't be an issue either. Lacking sufficient funds for a 20% down payment, I am exploring lenders offering 90%-100% LTC to minimize my upfront investment. With $40,000 in cash reserved for contingencies and closing costs, a 20% down payment would be just out of reach for me. I appreciate your consideration of my deal and welcome any solutions you may have.

Thanks - James

 Hi James, 

The main issue is the low property purchase price for each individual house. I am assuming the $229,000 purchase price for all 4 homes? Many lenders will require a minimum value of $100k per property, a few will go as low as $75k. 

Next is the experience. As a first timer, most lenders will require a minimum of 25-20% down. I am afraid your ask of 90-100% LTV on a low property price point and minimal experience simply does not exist. You may want to look for a partner on this deal if you simply do not have the funds to close on it. I would also budget more for reserves, closing costs and the potential of coming with funds to close on the refinance. Values have been dipping lately across many states.

[Andres Garcia]

This is going to be a very tough scenario, I suggest you stop putting money into this deal until you get things sorted on the financing side.

I would also be very careful with and sketical about any offers for 100% financing... it will not happen, they are lying 99.99999999999999% of the time.

The only realistic way would be for you to find a private investor to come up with the down payment for the mortgage but a down payment will be needed.

90% LTC is theoretically possible through a flip loan but in order to reach that level you would need to have a lot of completed projects under your belt over 2 years.

20% is possible but with 25% you would have a lot more options.

That is part of the issue with this transaction...

The other issue is with HOW MANY loans you are seeking...

This is not 1 loan because this is not 1 deal...

You need 3 loans because you are doing 3 separate transactions at the same time with the same seller.

Blanket loans do exist but they are not widely available.

Each folio number is a separate deal...

I went through this same exact thing on an 8 unit property that was NOT an 8 unit property it was TWO -  4 unit properties.

I am a correspondent lender with over 100 sources of capital... EVERY SINGLE source of capital I have told me that I had to treat it as seperate transactions.

It's worth mentioning because closing costs...

I would need more info on the make up of the 3 Lots, which lot has what? and what are the potential before/after values of each of the 3 properties and I may be able to provide direction on one or all 3 deals.

[Anderson S.]

Quote from @James Daley:

Good afternoon,

I have a slightly unique investment opportunity and I am searching for lending. Please let me know if you have any solutions. 

The property that I am under contract for encompasses four houses across three adjacent lots. The purchase price stands at $229,000 with an estimated rehabilitation cost of $50,000. The after-repair value (ARV) is projected at $428,000, potentially reaching $477,000 if sold individually.

Two houses require rehab, while two are rental-ready. My strategy involves repairing and renting all properties, anticipating a monthly rental income of $4,200 once all are tenanted. Income generation is expected to commence for two houses during the rehabilitation phase upon securing tenants. I was told by the neighbor that 3 houses on the same street were bought by a realtor and rehabbed and now rent for $1600 each.

I've already paid for and attended the inspection last week as well as paid earnest money so I'm currently $2000 into the deal. However, I've encountered a setback as my initial lender has withdrawn (100%LTV), necessitating the search for alternative financing. As a relatively new investor with ownership of one duplex, my aim is to transition to property rehab and the BRRRR method. After a year of research, preparation and saving, this opportunity—featuring four houses within two miles of my current home—appeared ideal. The issues I have run into are lenders not wanting to take a chance on my experience level and also the down payments being out of reach. My credit score is good at 730, and my monthly income shouldn't be an issue either. Lacking sufficient funds for a 20% down payment, I am exploring lenders offering 90%-100% LTC to minimize my upfront investment. With $40,000 in cash reserved for contingencies and closing costs, a 20% down payment would be just out of reach for me. I appreciate your consideration of my deal and welcome any solutions you may have.

Thanks - James

 We'd love to be a part of your real estate vision James. Feel free to DM/Email me - let's chat.