Hard Money Lending on high repair cost homes

3 Replies

I recently came across a property in Athol (yup way out there) and it looks like I can make a decent profit on it.  It is currently up for $79k and needs $120k in repairs.  I would not be offering the $79k, closer to 50k.  I ran into a roadblock with a hard money preapproval as this is over 2 times the price of the home to repair.  Has anyone run into this and how were you able to make it work if the deal made sense in the end?

No institutional lender is going to hand you $119K (70% LTV on ARV) secured by a $50K property. (In fact, you do you find one, send me the number)!

You need to find a partner to fund the rehab in this situation.  

This is what hard money lender call a Lop-sided deal where the repair cost is much more than the purchase price. There are lenders out there that will do it...you honestly might be better off if the purchase price were 65K than 50K. Your experience level will likely be a considerable factor as well as your liquidity. Your terms also will be affected negatively.

Thank you!  I figures this would be hard as the lender would be taking way to big of a risk when it comes to resale of the property.