All Forum Posts by: Darryl Hunter
Darryl Hunter has started 1 posts and replied 3 times.
Post: Funding Options to Rehab an Inherited Home (No Mortgage)
- Capitol Heights, MD
- Posts 3
- Votes 0
Originally posted by @Perry Farella:
There is a nice 30 year term rehab mortgage that will work for an Investment property in this situation. It is called HomeStyle. I work with investor clients who have paid all cash for their home or inherited it with no mortgage but need funds to rehab it prior to leasing to tenants. The loan size can be up to 75% of the Future Completed Value or ARV as determined by a local Appraiser. Since you own the home already no down payment is necessary. It is really 100% financing based on future ARV. The rules are that the rehab loan size cannot be greater than 75% of future value or ARV; you cannot have more than 4 already mortgage properties ( this is for small investors) and there must be a 10% of rehab budget Emergency reserve built into the loan for unexpected cost overruns during construction/rehab. This may be better than a Hard Money lender since you have 30 years to repay it; a fixed interest rate about 6% usually based on your credit score as Hard Money rates may be in the range of 8% to 15% locally; low fees generally and do not need any rehab experience to use this type of financing. My Blog has stories of how it has been used. Happy to answer any questiosn.
Thanks so much Perry. This sounds like a great option I wasnt aware of. After a quick Google of HomeStyle loans I have 2 questions:
1. I didnt see it explicitly stated anywhere that already owning the home means you don't need a down payment. Can you point out where you are getting that info?
2. The plan for the home was to create 2 units to rent (1 on each floor). I saw that for investment properties the home had to be a 1 unit. Does this mean I would be unable to use HomeStyle to turn this 1 unit house into a 2 unit rental?
Post: Funding Options to Rehab an Inherited Home (No Mortgage)
- Capitol Heights, MD
- Posts 3
- Votes 0
Originally posted by @Michael Ealy:
Originally posted by @Darryl Hunter:
I am looking for the best option to rehab a home I recently inherited to turn it into rental property. The home is completely paid off but in terrible condition and will need to be completely renovated. It was appraised by the state for 90K and the first rehab estimate I got was for over 300K. I am waiting to get the 2nd estimate and will be looking for a 3rd soon. My main questions are:
1. What is the best way to determine the homes ARV?
2. What are my best options for funding this renovation? Specifically the types of loans (Hard Money? Rehab loan? HELOC?) and where I should look for them.
Let me know if more info is needed to help.
Thanks
Darryl,
1. You can ask for a real estate agent to give you a Comparable Market Analysis of properties similar to yours but in good condition, in a quarter mile radius from the property, and sold in the past 6 months. That will give you an idea of the ARV
2. Given the rehab estimate of $300K (which is WOW) - no conventional banks will lend you money on it. Better get a hard money lender. Having said that, if this is your first deal, I won't be surprised if you will find it difficult to borrow money though. HMLs will look for rehab experience and if this is your first rehab deal, then it's going to be difficult. One way around this is to partner with an experienced rehabber in exchange for him/her being on the loan PLUS do the rehab, in exchange for a profit split. The HML will also look for YOU to have some skin in the game - say 20% of the rehab cost as cash on hand, so the HML might lend you only 80% of the rehab cost.
Thanks Michael. When you say an experienced rehabber do you mean a contractor who has rehabbed or are you referring to someone with experience on the financial side of a rehab? And if you mean contractor the money for the rehab is going to them. So I am expected to split any profits from the rental with the contractor on top of that?
Post: Funding Options to Rehab an Inherited Home (No Mortgage)
- Capitol Heights, MD
- Posts 3
- Votes 0
I am looking for the best option to rehab a home I recently inherited to turn it into rental property. The home is completely paid off but in terrible condition and will need to be completely renovated. It was appraised by the state for 90K and the first rehab estimate I got was for over 300K. I am waiting to get the 2nd estimate and will be looking for a 3rd soon. My main questions are:
1. What is the best way to determine the homes ARV?
2. What are my best options for funding this renovation? Specifically the types of loans (Hard Money? Rehab loan? HELOC?) and where I should look for them.
Let me know if more info is needed to help.
Thanks