I am considering buying a house to flip that has a couple substantial issues. I am confident I can get the property under contract low enough to make a healthy profit, but I have concerns about financing the deal, even with hard money.
Here is a rough break down.
ARV 200 - 210k - desirable neighborhood. Value based on 2015 solid comps.
Normal/ expected rehab expenses look to be around 20-25k
Big issues -
Home sits on downward slope, & has a walk out basement. The foundation has moved causing a 2" crack up the mortar joints of the exposed basement wall. Clearly this needs to be corrected. I had a foundation contractor out yesterday to get an estimate. (he will have it early next week) I made a real big deal about this, and seller is aware price will need to go down, and no residential buyer will touch the house.
Home also has an in ground pool, that needs a new pool liner, It also has a light that has fallen out of the side, leaving an open hole in the side of the pool.
Assuming I can for an amount that makes sense (I am guessing around 80k after discounting the price to cover the structural issues), Can I expect a Hard money lender to loan on this property? I will use a partner to cover down payment and help float the expenses.
as long as you have true estimates on rehab from a licensed contractor and an ARV from a licensed appraiser you should be fine as long as you or your partner are putting 20% of the purchase and rehab into the deal. We do loans all the time like this and I applaud you for doing all this due diligence. I teach students all the time how to do this and present to a lender. Best of luck always.
Thanks Dan. I appreciate your help.
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