Hello all you flippers and keepers!
A little background on me: My name is Brandon Heist, I am 23 y/o living in central Pennsylvania - I have been COO of a website development company, VP of development for a Land Development company, a dishwasher, bartender, (almost) a Marine, a college dropout and many other things. However, I come to you in this post as a rookie seeking to take the first steps in building a Real Estate Empire of my own.
As of the past several months my primary partner and myself have begun "getting our ducks in a row" in preparation for our first few deals. With that, today we met with a hard money lender and I am seeking feedback on the options for funding we were given.
10% + two points - property would have to be purchased for 45-55% ARV with $25K anticipated gross profits. Loan duration of 100 days, 1.5% interest added after 100 days.
7% 40/40/20 split upon closing (lender being 20%) - lender would completely finance deal: purchase, rehab, closing cost.
Now with all that mentioned, which option would you choose? Why or why not?
Thank you for all the help!!
Have you and your partner tried to get conventional lending with an interest only loan? If this is your 1st flip, do you have the right contractors in place to pull off a renovation of a house in 60 days ( 2 months) on a house that must be in bad condition to be able to get at 45-55% of ARV, do not forget it has to get on the market and sold in 100 days, otherwise it will cost you more money with option 1. OPTION 2 is not bad, if there is no time limit for you, just remember he would be getting his money back plus 20% of the profit of the sale, still meeting that ARV valuation though.
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