Hiya!! We will be going into contract on our first Fix and Flip today!!! Super excited and now a lot of work to begin!!
I have a great hard money contact, who has approved me, but it will be expensive and I'm looking to shop around and see if I can't get that 15%, 4 points lower! We will need to finance the cost of the house (117K) plus the rehab costs (roughly 53K on the high side, my contractor is looking into breaking down materials and labor and where we can save on materials).
Closing will need to be about 1st week in January. We are in process of getting a HELOC so we have the reserves, if necessary.
Does anyone have ideas of local banks who offer portfolio loans for these projects? Of course I will use hard money if I need to, as a deal is a deal! But again, looking to save and get out with more if possible. Also, I have to lock in my financing approval by like Friday of next week (Nov 4th) per our contract!
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HI, its hard to get less than 10-12% on your 1st deal, folks want a track record. if you put more down, you can usually get a discount as its less risky for the investor.( get friends/family to get you 10-25k so you can "have more skin in the game" and the investor usually appreciates that.
also its your 1st, why not just BUY it in your name? then they will loan 80% of it for 5% usually right? say its a 2nd home or vacation home etc?
( the bigger issue is down the road when you have 4-5 in LLC names, that's when the bank won't let you do that, they hate LLC purchases)
also have you looked into crowdfunding sites:
@Holly Scott there are definitely better hard money rates than 15% and 4 pts. Do some more shopping on that front. In your situation, I would try the local banks and credit unions. I have had success getting "Business Loans" secured by real estate. Keep asking how can we do this?
@Scott Elkins we can't use regular financing as we don't have enough down payment and most won't finance the repair costs also, when it's not an occupied primary residence. @Bill S. I am talking the VP of Bank of Colorado and there are a few other banks I will talk to as well. I have until Nov. 7th so tight deadline. I will also look at groundfloor.
If you tell us the ARV of the house, we will have a much better chance of comparing your current financing with what else may be available.
Haha!! That might be helpful! The ARV should be 240k.
And when I say should be, I mean my realtor has pulled good comps and is confident she can sell it for that. And if the housing trend continues up the way it has been, then maybe more like 255k.
Here are three hard money lenders I would recommend who I think you could do much better with:
1 - Merchants Mortgage (Out of Denver - just google their website. I would recommend talking to Tracy McDonald there).
2 - Pine Financial (Also out of Denver).
3 - First Bank (Portfolio lender who you may be able to use their construction loan).
Hi @Colin Smith ! I am currently working with both Merchants and Pine! Pine is proving to be more expensive but I can use my reserves for holding costs. I have talked to a couple local banks, but not First Bank. Just trying to get the best deal before I pick one.
@Holly Scott , That is great to hear. Pine definitely can be expensive. If you talk to First Bank, talk to Abbie Neuenschwander at the Monument branch as she is more familiar with the construction loan.
Wonderful!! I will try and get in contact with her today.
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