I put in a $350,000 offer on a home in Falls Church, VA that has an ARV of $525,000 and estimated renovation cost of $75,000. This is my first flip and I'm on the market for a hard money lender. If you or someone you know can help, please let me know.
@Andrew Michael is a local hard money lender. Also for what its worth, line up financing before you maoe offers in the future.
I've spoken to Andrew a handful of times and he's great. They only do 80% ARV and I don't have that kind of cash to put down.
I started doing the math on this deal...and the margins seem pretty tight.
-$42,000 sales cost
-$350,000 purchase price
-$10,500 purchase closing costz
-$33,600 hard money costs (3 pts, 10% for 6 months on $420,000 borrowed)
=$13,900 potential profit.
This is a very tight deal, especially for your first flip. Purchase price and rehab is 81% of ARV, which doesn't leave room for profit or for things to go wrong. Buying and selling costs already make up 10%, and hard money itself will cost between 5-10%. And that's assuming everything goes as planned and that you ran your numbers correctly.
I can help you find a loan for it, but I recommend you find another deal. You're more likely to lose money than make it on this one. Try to find deals that follow the 70% rule for your first deal.
Also, you mentioned another HML does 80% of ARV. Did you mean 80% of ARV or 80% loan-to-cost (purchase + rehab)? 80% of ARV would mean 1% down (since your total costs are 81% of ARV), whereas 80% LTC means 20% down. I'm guessing it's more of the latter since 80% of ARV means that lender will do 100% financing in some cases, which is very rare, especially for a 1st-timer.
Here's what I would advise. Punt. Don't close. Sell the contract. Do what you need to do to get out of that deal. Lose your deposit if you have to, but walk away. Cash to close will be $55,000 plus pre-paids and transfer taxes for a total of about $60-$65,000. That's at 10% down. Your carrying costs alone at $420,000 will be $4200 per month and if you don't have reserves on a deal like this you can get crushed.
Here's why; the numbers are too big for cash flow if you have to keep it and the numbers are too tight to make a profit after you renovate, assuming you find a hard money guy that will do it. You need a 90/100 (90% first of the purchase and 100% of the rehab) and I don't think it's out there for you at that loan amount and with that experience.
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