Can someone tell me what this means exactly?

Question

I was having a conversation with my buyer asking if he prefers to run off 70%ARV vs 65%. His response was

"I can do 80% LTV with purchase price and repairs compared to LTV."

Can someone explain exactly what that means so i can better assist him in finding what he wants?

Patrick Liska · Answer

What he is referring to is, he can get 80% loan to value (LTV) but that 80% should be the purchase price plus the cost of the repairs. so a house with an ARV of $100,000 , he can get an $80,000 loan. if the house requires 20,000 in repairs, the cost of the house he will buy is 60,000 ( 60,000 + 20,000 = 80,000), so do not show him a house that would cost him more than 80% of the ARV after repairs.

Jim K. · Answer

Stop it with the acronyms and the jargon. Just stop. Call the guy up and make a conscious choice not to use an acronym when you talk to him and make him explain every single last acronym he tosses at you. You are not all-real-estate-cool. You're a student of this. He will be patronizing. This does not cost you anything but misplaced pride you will come to realize you will do better without in this field of endeavor. Make him explain to you exactly what he really means.

Christi Hawkins · Answer

@Kevin Powell  The best advice I've ever been giving is don't be afraid to say you don't know, if you don't. He should respect the fact that you want to be crystal clear in his expectations before wasting his time with deals he doesn't want. If he isn't then let him go and another one will come along. In the meantime, practice, study & learn

Daren H. · Answer

In your first post you say the buyer said compared to LTV. In another post you say the buyer said compared to ARV. I would imagine he is referring to being all in (purchase + repairs) up to 80% of ARV (in addition, maybe he has a lender who will loan up to 80% LTV). I would imagine most wholesalers are not concerned about the behind the scene financing of a buyer. Most are looking for someone signing up as a cash buyer with no financing contingencies in the contract. Is your buyer a newby? If so, it is very possible he/she does not fully understand the industry jargon. You might be the educator in this situation.

Kevin Powell · Answer

@Daryl Demz thanks a lot Daryl that helps me, i will call and confirm what he means but I appreciate you respecting my novice experience lol

Kevin Powell · Answer

Lol people get snappy in here or maybe it’s passion. But I asked because he’s not available at the moment and @Patrick Liska was able to help a ton too. Thanks for that break down. I know I can get on the phones but do to the timing we weren’t able to

Jim K. · Answer

LTV means loan-to-value

"LTV with purchase price and repairs" means what you paid for it plus what you're paying to fix it, NOT ARV, after-repair value. He can't use the ARV values you're trying to provide him. Real estate investor tends to hyperflate what they think their ARV value is for any sort of financing purposes. Hyperinflate it like a banana republic generalissimo ruining his economy.

Kevin Powell · Answer

Me: Ok man I will keep you in loop. You work off of 65% ARV or 70%?

Him: I can do around 80% LTV with purchase price and repairs compared to ARV. Thanks!

Does this help at all? @Jim K. @wayne brooks

Can someone tell me what this means exactly?

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