Financing my first buy

5 Replies

I am looking at a house built I'm 1983 that is in a good neighborhood, full of the same style renovated, modern looking homes. The asking price is 50k, and I am looking to offer 40. Previous tax assessments and property value in the neighborhood put the value at about 80k after it is fixed up. It needs about 15k of work, all of which I could do myself. My question is, I don't have a lot of capital to work with, but steady and decent pay checks. Now, if I could get about 7k in down payment and closing costs, I can use an FHA loan which I am already pre-approved for. However, would the VA loan benefit me if I plan on refinancing to a conventional after renovations, in order to cash out and rent out? Or would my money be better placed in an FHA loan where I would probably be doing the same thing?

if you are looking to flip and the numbers work dont let money stop you. dont try and work your way into the best loan with best interest and the best fees etc. just do a few dozen call to different lenders and hard money and crunch your numbers , pick the one that works best and just go for it, huslte it correctly and hard and you will make money but if you miss it because of analysis paralysis you never will

hope this helps.

For what you are trying to do, I believe that @Justin Kane  is correct. 

However, are you planning to flip or will you be keeping it for a rental? 

VA is definitely a very slow option and something that I'm doing right now.... if it's a good deal, more than likely, VA loan won't cut it.

There are other ways to finance the flip rehab, such as using VENMO or PLASTIQ to pay vendors and getting business credit cards (Chase INK, AMEX Business, etc)... but DONT GET CAPTIAL ONE- they are all PERSONAL cards, regardless of what they say. If you get a personal card and max it out, it will really hurt your credit score. 

Chase Ink should get you around $10-$15K and AMEX should get you around the same. The cool thing about the AMEX is that you can spend over the limit, you just have to pay the amount back by the end of the next billing cycle that you went over. Both are 0% interest-free for a year, so free money. 

Anyways, if you are going to go the hard money route, check out RCD Capital, I have worked with Jonathan Surak and highly recommend. All hard money lenders are going to be a little salty in the interest rate side of things, but not the worst. 

If you aren't worried about closing super quickly, you could always try to do a Homestyle Loan, which will fund your loan and renovation. However, wouldn't really work if you are doing work yourself, unless you could get a contractor to just sign everything for you... which isn't fun. 

Anyways, good luck and let me know if you need anything. 

If you are going to try and go the conventional route, a good investor-friendly lender that I have worked with and recommend, check out @Diana Muresan , she can lend in all 50 states. Again, this is no the fastest/quickest route. Hard money or a short term loan is probably the way to go. Worst case scenario, you could get a personal loan, if you can float the higher interest rate (usually these will have a little longer term such as 3-6 years, so payments would be lower, just higher interest amounts. Make sure it doesn't have a pre-payment penalty. 

-Scott

@Jacob Lessard if you are a veteran that VA will be far superior for you to keep your out of pocket expenses. Do you know if there is a reason why your lender didn't suggest this loan type for you? Likewise, there should be plenty of Down Payment Assistant programs for you since you are planning to occupy the home. Did they talk about that at all? I know sometimes when you are new it's kind of like you don't even know WHAT the questions are to ask but I feel like the person you are using should have brought some of these things up.  I hope you don't mind me saying it like this.  Go back to them and ask these questions.  If you are already pre-approved that's a good position to be in but let's get some more information from them please.  Feel free to check back in after and feel free to tag me with any other questions.  Semper Fi.

HM won't lend to you with only 7k. You'll lose that just in closing the property.

I would suggest a live-in-flip/BRRRR with an FHA loan or save some money up because living with only 7k to your name and sinking it into RE is an uphill battle.

VA loan is a very costly loan upfront. Additional fees are tacked on to the loan in order for you to get your 0% down. That is a one time service fee. Talk to a lender and ask about your options.

@Jacob Lessard

If the home needs ~15k in work, the VA will most likely not allow you to use the VA Loan. I've used the VA loan three times now and when they do an inspection (keep in mind this does vary per VA inspector) any repairs must be done BEFORE they will award the VA Loan.