I have a unique opportunity in Currituck county NC where I am currently under contract on two separate homes on the same 1 acre lot. As I'm unable to get a traditional 30 fixed loan on this property I'm looking at other lending options. I would like to roll the rehab costs ($20k to $30K) into the loan if possible. I plan to hold these homes long term and rent them. I'm looking for a bank or local lender that I can work with. Any suggestions are appreciated! Thanks!
I found Eddie Cooke at Xenith Bank to be very helpful.
What would the purchase price and ARV be on the deal.
Hi Nick. How much money are you looking for and for how long? Will you be refinancing with a bank once the rehab is completed? I might be able to help you come up with the rehab money. If it is out of reach, Wells Fargo has a 203k loan product, but I will share with you that it is a long, difficult, and costly process.
Any relation to Gabe?
@Nick Contristan I would recommend calling the smallest 2 or 3 banks in your area for this. I've found that smaller banks are much more eager to do construction loans on investment properties.
ARV is a good question. The home sold in 2009 for $215,000. A permitted second home (2 bed, 1bath) was added in 2015. I'm under contract for. $175,000. I'm budgeting for new roof, flooring, interior paint and cleaning up the yard. This should be less than $20,000. Our plan was to include the rehab costs in a traditional 30yr fixed loan, then buy and hold the property renting to year round tenants. At some point the plan is to pull cash out for another investment. I'm trying to put as little cash down as possible. Yes, Gabe is my brother. Thanks for the input!
It sounds like you might have a nice opportunity there. Have you considered reaching out to friends, family, local investors to pool their resources together and pay cash for the purchase and renovations? Once renovated get the property stabilized/rented and then go to the bank and place a 30 year conventional mortgage on the property? Hopefully it would appraise high enough so you could cash out 80%, repay your debts to friend/investors and have a cash flowing property with zero dollars in the property. You could save a lot of transaction fees that way and reduce your holding costs over the 203k loans or hard money lenders. You will also have more control over the renovations and have the option to perform some of the work yourself. That strategy can work if the renovations go as planned, the rents support your cash flow needs, and the house appraised where you need it to .... $275k.
One last thought. If you have the property under contract and your plan is to rent long term, take some pictures of the property and run some test ads on CL or Coastland Times to make sure your rental projections are achievable.
Jason, thanks for the input. I think we have the financing figured out at the moment. My fear is what the house will appraise for after we clean it up and find renters. From a cash flow and cash on cash return perspective it looks like a very good deal. I just have no idea what it will appraise for as two homes on one lot is unique. I do want to pull cash out so the appraised value is important to me. We're going to call some appraisers on Monday to see if we can get some sort of estimate without going through the full process. Our agent is also pulling comps from the MLS but since there is no field to identify two properties on one lot, it will take some hunting to find what we're looking for.
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