I am fairly new here and am currently working on my second deal outside the greater Philly area. I currently have an offer in on a SFH and am expecting the negotiating to end at 70K with an ARV of around 130K. As a buy and hold property, this can potentially yield substantial cashflow of almost $400/mo!
A contractor friend walked the property with me and we have a healthy estimate of <15K of work required; landing me within the 70% rule. The house itself is technically move in ready but there are some horrendous cosmetic issues that need to be addressed. THere are also some issues with some aspects of the outside - the detached-garage roof is rotting and needs replacing, the outside back porch overhang roof is also rotting and needs replacement (has signs of mold / mildew on underside, shingles are missing)
Now, this is an REO and the broker states Conventional Financing is an option so I plan to put 20% down as I'm preapproved. For the rehab, I have a private loan from a family member to cover costs; loan to be paid back with interest in 12 months , give or take. Now my question is 2 fold:
First: What's the best way to handle the 15K loan payback to the family member? I've read about Heloc's, cash out refinance etc. but don't have a firm grasp on the minutia of how these work and what the best plan of attack is for funding rehab.
Second: Although I'm preapproved, is there a concern for my lender rejecting the deal because of the rehab involved or the lack of a Cert of Occupancy at closing? Again, As-Is the place is liveable - just not likeable...
Any and all feedback is greatly appreciated!