needing help on private, conventional or hard money lending on a deal for $33K.

Private Lending & Conventional Mortgage Advice
11yFollow

needing help on private, conventional or hard money lending on a deal for $33K.

James Palin
Dallas, TX · Member since 2014 · 189 posts · 39 votes

I have a deal in Fort Worth, TX under contract for $33K.  The challenge is that a lot of banks and hard money lenders won't lend for a loan amount of under $50K.  

I am looking for any conventional lenders or hard money lenders that will loan amount of this size. My repairs are estimated at about $5K to $6K. ARV is estimated at $55K. This is for a fix and flip property.

I am open to any interest of  anyone who works or has connections to banks or hard money lenders who will lend on loan amount of this size.

I am open to sharing the details of with private money lenders.  If you are interested, please private message me and I will send you my proposal.

0Reply
21 views

Most Popular Reply

Curt DavisBusiness Member
Flipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes
11y

@James Palin

I am having a hard time seeing how you are going to make any money if this is a fix and flip deal when using private money.  Here is how I see the deal.

$33,000 purchase price and $6,000 rehab totaling $39,000.   You will have closing cost, pay taxes and insurance and most likely private lender loan origination fees totaling around $4,000  so your now in the home for around $43,000.   You will have holding cost of about  $1,300 assuming you can repair and sell within 90 days so now your in the home for $44,300.  If you sell to an investor who pays cash ( best case scenario ) you will pay closing cost again of about $1,000 so your now all in this deal for $45,300 and that is if everything goes perfectly.  If you sell the home to an actual owner occupant you will not pay a buyers agent commission of 3%, they will want/need closing cost assistance and they will do a home inspection and find more repairs needed.  You will be luck to escape the deal.  

To me the profit margin is too slim.

Good luck

Curt Davis - KAIZEN Realty538 Reviews
WebsiteView Page
1Reply
See this reply in the discussion

9 Replies

Jump to latestLatest
  • Curt DavisBusiness Member
    Flipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes
    11y

    @James Palin

    I am having a hard time seeing how you are going to make any money if this is a fix and flip deal when using private money.  Here is how I see the deal.

    $33,000 purchase price and $6,000 rehab totaling $39,000.   You will have closing cost, pay taxes and insurance and most likely private lender loan origination fees totaling around $4,000  so your now in the home for around $43,000.   You will have holding cost of about  $1,300 assuming you can repair and sell within 90 days so now your in the home for $44,300.  If you sell to an investor who pays cash ( best case scenario ) you will pay closing cost again of about $1,000 so your now all in this deal for $45,300 and that is if everything goes perfectly.  If you sell the home to an actual owner occupant you will not pay a buyers agent commission of 3%, they will want/need closing cost assistance and they will do a home inspection and find more repairs needed.  You will be luck to escape the deal.  

    To me the profit margin is too slim.

    Good luck

    Curt Davis - KAIZEN Realty538 Reviews
    WebsiteView Page
    1Reply
  • Account Closed
    Investor · Kansas City, MO · Member since 2010 · 239 posts · 110 votes
    11y

    Hi James. 

    I have to agree with Curt. I too don't see the upside/profit in this deal. 

    The other aspect of fix and flip is resell. Are there a lot of owner occupants in this particular area? You want to be in an area where you have the best likelihood of resell (the more owner occupant buyers the better). 

    Finally hard money lenders want to make larger loans, true, so can you look in a better location where not only would the loan be larger (to interest more hmls) but also you might have more prospective buyers (owner occupants) therefore the potential for profit is better... ? 

    Good luck!

    0Reply
  • Crystal SmithPro Member
    Moderator
    Real Estate Broker · Chicago, IL · Member since 2014 · 2k+ posts · 1k+ votes
    11y

    This deal is way to skinny.  One thing goes wrong and you'll be in the red.

    312-681-7487
    0Reply
  • James Palin
    OP
    Dallas, TX · Member since 2014 · 189 posts · 39 votes
    11y

    Yeah, I am working on getting the seller to come down a couple grand.  Let's see what happens.

    0Reply
  • James Palin
    OP
    Dallas, TX · Member since 2014 · 189 posts · 39 votes
    11y

    @Curt Davis , @Account Closed 

    What would you consider an acceptable offer price to the seller and acceptable profit margin?  I am working with the seller to get them to come down.  I also found a conventional lender that will lend on the cost and repair mount of $39,000 with 15% down.  Estimated closing costs are about $1800 with 1% origination point.  Any additional feedback and help is appreciated.

    0Reply
  • Dwight Crocker
    Real Estate Investor · Arlington, TX · Member since 2014 · 33 posts · 14 votes
    11y

    Who is the lender?   Like you said, it is tough to find lenders willing to loan on these small deals?  Thanks.

    0Reply
  • James Palin
    OP
    Dallas, TX · Member since 2014 · 189 posts · 39 votes
    11y

    Star Bank of Texas.  I'm just starting the origination process. I'm not there yet.

    0Reply
  • John Verdier
    Rental Property Investor · Weatherford, TX · Member since 2014 · 12 posts · 11 votes
    11y

    IMO, You should be looking to buy this property for around 27k to be worth the time and risk involved.

    You should also be pre-approved with a lender prior to looking for deals and making offers. 

    Don't go hunting without a loaded gun.

    1Reply
  • Joseph Ball
    Residential Real Estate Agent · Groveland, FL · Member since 2012 · 504 posts · 395 votes
    11y

    This is way too thin. John Verdier is on the right track., but I would even go less. If you can't steal it, why buy it?

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free