Thats great that you found a potential deal! If it is indeed a great deal, then there are a few ways you can fund the rehab.
1. Hard Money (The flip I am currently working on, we used a Hard Money loan for the purchase of the home and the renovation)
2. Some contractors will allow you to finance your renovation projects through them.
3. Partnership. (If you can fund the purchase of the home, maybe you can find a partner to front the cost of the renovation and split the profits.
A few things to think about:
If it is truly a real fixer upper, then conventional funding may be hard to get. Also, it is great that you love the house, but make sure you are loving it for the right reason (That it is a good investment) and not that you can make it look awesome. My wife and I fell in love with our first flip and made very little off it because we were more interested the aesthetics than the finances.
Best of luck and let us know how we can help!
P.s. What is ARV and estimated rehab?
Hello and thank you for coming here Ryan and wife! You may not believe everything I say and nothing is said to hurt you personally. Unless you are doing any kind of special you might ought to borrow money from someone who lends you enough for the purchase and the repairs/rehab expense. Private Lenders, Hard Money lenders, or doing a "cash rich" Partner that will make you be able to do your entire project. Even your Bank may not allow a 2nd note see the contract and see if it contains any language about that.
Remember that the bank does most things that will benefit them, not you. Their interest rate may be the lowest but in the end, the loan you get usually makes your outcome not matter very much to the planned outcome. Your final considerations are Credit Cards or a HELOC but do their benefits carefully and pay them off in time. Don't make their plan work.
Who the hell am I and what should believe is true that I say. One reason is my age of 61, about 30 years in construction management, about 30 years I had real estate broker license in Texas, and I got a college graduation degree in Business (that emphasized real estate) , and being born and raised in Dallas, Texas.
I'm completely un-knowledgable and where to be in Minnesota and is beyond my knowledge. Your circumstances may prevent you for going where the action is but if you have no family obligations always be able to move to where that economy helps y'all.
Good luck to both of you!
Without any experience a hard money lender is probably your way to finance this. With the amount of cash you are bringing to the table this shouldn't be an issue getting a loan.
Looking at the numbers you presented it sounds like you are planning on around a $50k renovation. I do not know the condition of the house but if you have to fully renovate a 2,500 sqft house with all new flooring, exterior package, etc I don't see this being enough unless you plan for sweat equity.
Flooring estimte looks low.
Window wrap, aluminum facia and soffets?
Trim and doors?
I would spend a lot of time looking over costs as the first flip usually will go over budget.
@John Woodrich is spot on. The numbers baloon alot unless its sweat equity.
Have you read J. Scott's books on flipping houses? It made me realize and think of things I have never thought of before. Probably saved me $20k in missed flip items.
If you have a little cash you can probably get your deal funded
@Ryan Mosch sounds good. Just make sure you are pretty firm on the numbers as it is easy to get smoked on the first couple of deals by missing some of the items I posted above. I have seen people miss many obvious things (drywall, insulation, HVAC, etc) and they were costly lessons.
I started out with sweat equity, moved to the point where it was a contingency plan if something went wrong, and now I am rarely involved the physical side of remodel projects.
Originally posted by @Ryan Mosch :
That’s where I would like to get as well. We looked at the house. And this deal is not for us. We found that all 4 walls in the basement are buckling in and the house needs to be lifted with a new foundation put in. This would have left us with an off between 40k-50k. The realtor said there are already half a dozen offers on the table and the asking prices has already been met.
I don’t understand how someone can make any money at that price point with what the house needs. But I am curious to see if they actually repair the massively damaged foundation, or try to hide it by “finishing” the basement.
Ethics run the entire spectrum in real estate. There is always someone out there who is willing to sweat equity a whole project to make a "wage" of $25k and there will always be someone out there who is willing to cover up some problems to make a buck.