New to Real Estate · Charlotte, NC · Member since 2019 · 73 posts · 46 votes
I am looking for funding but I don't have much to bring to close. Property is $82K purchase price, ARV is $198K and reno is $35K. The numbers are great. My credit is not strong at all and I only have about $8K cash reserve. Am I going to have to let this incredible opportunity go?
@James Williams What is your risk tolerance? Personally, if I was in your position I would get a hard money loan and go for it. However I have a high risk tolerance and I am still very young. Don't want to take on as much risk? Half of a deal is better than no deal... Get a partner!
@James Williams there are HML's that will do 70% of ARV and that allow the cash to be used to cover purchase, renovation etc. I don't know if any of those lenders fund in your neck of the woods but it might be worth looking into.
@James Williams there are HML's that will do 70% of ARV and that allow the cash to be used to cover purchase, renovation etc. I don't know if any of those lenders fund in your neck of the woods but it might be worth looking into.
I have definitely looked into it. The options I found were super expensive. I mean like 6.5 origination points and 1.5% monthly interest payments on the full amount of the loan, not just what I have used. Others won't lend to me because I don't have any experience flipping. I would definitely have to either have more capitol or find a willing partner. Or both!
@James Williams 82,000 X 12% interest for HMoney = 9,840 divide by 12months of the year = 820 X 6 months for the duration of the loan = 4,920. Now 82,000 X 1% 1 point for the coast of loaning=820 so for 6 months it will coast you 5740. Monthly payments would be 956.66 cents.
I say you can afford it. But due your  do diligence. Get the book by J Scott the book on flipping houses.
@James Williams 82,000 X 12% interest for HMoney = 9,840 divide by 12months of the year = 820 X 6 months for the duration of the loan = 4,920. Now 82,000 X 1% 1 point for the coast of loaning=820 so for 6 months it will coast you 5740. Monthly payments would be 956.66 cents.
I say you can afford it. But due your  do diligence. Get the book by J Scott the book on flipping houses.
Can any one correct this if wrong thank you
The full loan amount would be about $136K, maybe a little more. Gotta factor in closing cost and the 6.5 points of origination fees plus the cost on the back end to sell the property.
@James Williams Sounds like you do have some great numbers there James. May I ask why are you so set on doing it yourself? is it the potential dollar amount you can get on your own? Seems like everyone is leaning towards a partner which I would say should be your best option and if not the wholesale. But if you get a great partner that can be many more great deals down the line for you. Good Luck share which route you took I'm interested in how everything turns out.
@James Williams I am in the Huntersville area and very close to the property you're discussing. I'd be interested in partnering with you, potentially, or if you want to wholesale it, having that discussion as well.
6.5 points sounds extremely unusual to me as well. How many lenders have you asked about this? As a loan officer 4 tends to be the cap unless there are extenuating circumstances.
@James Williams I think funding needs to be secured before you even go under contract. You essentially have a product that doesn't have a customer lined up yet. Whole sale or partner with someone as its urgent. If not, let it go and take it as a hard lesson.
6.5 points sounds extremely unusual to me as well. How many lenders have you asked about this? As a loan officer 4 tends to be the cap unless there are extenuating circumstances.
Its definitely extremely high. Plus an additional 1.5% a month interest. That is the price you have to pay for anyone to risk 100% financing on a rookie with insufficient reserves. It actually makes sense to me. I'm just not willing to pay it.
Ask the seller to carry back the note on the property for 12-18 months (allows the title to be seasoned so that you can refinance). As soon as you can (maybe even before the term) refinance and pay the seller’s note. Your rehab shouldn’t take but more than a couple of months at that price. And you’ll be in peak selling season (or peak valuation season) within a couple of months whereby you’ll likely get the highest appraisal for refinancing.
Hit me up in a pm and let me know how it works out.
Would the Seller NEED a Lump sum? Could he take some payment now, with a balloon in 2 years? If so, you could pay Seller off balance when you finish Rehab and Sell.