Refinance options for my property in GA

[Joshua Kavadi]

Dear all,

Need suggestion /Options regarding my Re-finance  Loan for my investment property.

Situation : My  appraisal came back, the value came in at 257,00 K for single family house in GA.My loan amount is 235 K.

the lender says even if they offer 80% of the LTV is 204 K .

I need suggestions how to structure this deal to get the loan without paying closing cost.

thanks

Joshua

[Mike Klarman]

This is what happens when the numbers are not accurate at the point of purchase.

With a 235k project cost, you'd need an ARV of 335k for the deal to make sense. That's around a 70% project cost. For it to come in at 257k is concerning. Either you were shown comps that do not comp to your house, or the contractor did a terrible job, or the market tanked.

First, no hard money lender is even gonna give you 80% in a refi.  75% and if you have a payoff of 235k, figure in another 5k - 7k in closing costs.  That's around 242k needed just to get the lender right and then I'm sure you are in 20k or more.

These are the nightmare situations beginners find themselves in all the time.  They really do not realize how big of a spread you need on deals to ensure you do not find yourself in a spot like this.

Before you go and just order another appraisal, look at the comps that were pulled in the report and did you come across those in your analysis?  Before you order another appraisal, look for your 300k comps, you really need 335k.  Cause even a 300k value is a 225k refi.  Between closing costs and payoff you need 242k.

There's no scenario where you don't bring 20k - 30k to closing and also leave your initial money in as well.

I can only imagine this was a "wholesale deal" and you were shown comps 300k+. I have even worse news for you I'm afraid in that houses rarely trade for their ARV in the report. It is usually less.

You have two options.

1) Sell and hopefully get the 257k.  If 242k of that goes toward lender and closing, you can recoup 15k of your initial money and you learned a lesson for cheap relatively speaking.

2) You come up with whatever you need to and refi in order to protect the money you have in.  Now you are in for what?  50k?  And now you are playing he long game.  5 - 10 years down the line you refi and make yourself whole.

There's no way that I see you can close a refi with "little money" needed at closing.