Through a wholesaler associate of mine I have the opportunity to acquire a 3 bedroom, 1.5 bath, 1500 sq foot single family home. The agreed upon price is $91,000 with a $40,000 rehab (had my contractor come out and give me an honest estimate with me there, I've used him many times before). He said he could finish it in 4 weeks, the sales comp I have is right across the street for $189,000 and it took 2 months to sell. I know the area well as I grew up there. I also am a licensed realtor so I can save at lest %3 on the sale.
I am ready to apply for a HML at around %12 but am having a little trouble coming up with the %20 down payment for the loan. I am thinking of taking a personal loan out from TD bank for $25,000 at %8. I ran all the numbers through the flip calculator and being very conservative with all the numbers I'm still looking over 20k profit. My question is; am I extending myself to far for this deal? And does anyone have any recommendations for HML in Pennsylvania?
I think it depends on your personal financial standing at this point. Its hard to say leverage per deal because it may be one risky deal among 100 or one among 2. CAn you give more information on your situation?
Financially I am in good shape, have enough in savings to cover the down payment but would rather not use my own cash reserves just in case. I work full time and live in a duplex where almost %100 of my living costs are covered outside of student loans, utilities and food.
And if I follow what you are saying; this is the only deal I have in the works right now. I had originally planned to source the down-payment through private money of someone I know but it doesn't seem to be happening right now. I was going to offer %10 on her money and this personal loans looks to be cheaper then that, so I'm leaning towards pulling the trigger, just looking for outside perspective.
Thanks for the advice, I am going through that process now. Just need to find someone willing to lend a small portion to make a good return.
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