All Forum Posts by: Hyeseong Park

Use the fix & flip loan to cover the purchase + rehab, and use the Bloc loan strictly for holding costs like interest payments, insurance, utilities, taxes during the rehab/sale process. I’m planning to sell the property after rehab (resale exit).

Estimated profits after all costs (including loan fees, interest, selling costs) are around $40k–$50k.

Questions:

1. Do you see any downside to using the Bloc loan (12% secured against my rental) as a buffer for holding cost?

2. Any potential risks I’m overlooking?

3. Would you approach this financing differently?

Thanks so much for your insights – trying to make sure I’m not missing anything before I move forward.

0 Votes

Hey BiggerPockets community! I’d love to get your thoughts on a deal I’m working on and my financing strategy. Appreciate any advice or insights.

Here’s the breakdown:

Property Details:

Purchase price: $40,000

Rehab budget: $60,000 (lender holdback)

ARV: $175,000

Financing:

I’m getting a fix & flip loan with the following terms:

Loan amount: $100,000

Interest rate: 12%

Origination fee: $3,000

Processing fee: $450

Interest-only payments: $1,000/month

6-month term

Rehab holdback: $60,000

I also have access to a Bloc [Business line of credit] loan (secured against my rental property, NOT the flip property) with:

Loan amount: $35,000

Interest rate: 12%

Term: 3 years

Secured by my rental property

No other fees rather than 3% app fee.

My plan:

Estimated profits after all costs (including loan fees, interest, selling costs) are around $40k–$50k.

Questions:

1. Do you see any downside to using the Bloc loan (12% secured against my rental) as a buffer for holding cost?

2. Any potential risks I’m overlooking?

3. Would you approach this financing differently?

Thanks so much for your insights – trying to make sure I’m not missing anything before I move forward.

0 Votes

Quote from @Payton Haight:

That makes sense. You could look around to see if you could get an investment property HELOC. I was curious what those rates and fees looked like not too long ago and was quoted 9.5% for 3% closing costs on one of my properties by Better Mortgage. I believe their minimum HELOC size was $50k though.

Got it! I will take a look at their website. Thanks for the info!

0 Votes

Quote from @Payton Haight:

12% is expensive, but could be cheaper than continuously paying points on hard money loans if you are flipping properties quickly. Are there any origination or other fees to open the line of credit? Do you have a low interest 1st lien on the property? I assume that is why you are not looking at a cash out refi.

Yeah thats' what I thought. And there is only 1 time closing costs which is approx 3% of line amount ($1,059), nothing else. For the 1st lien, the interest is 7.3%. And yes. I'm trying to protect my cashflow as much as I can from 2nd loans so.

0 Votes

I recently found a lender who supports providing BLOC (Business line of credit) from equity from my rental property which is under my "LLC", which usually lenders don't offer. But they provided me 3 year DRAW + 27 years term with 12% APR for $35,000, which is expensive.

However, the purpose for the BLOC is just to flip simple cheap houses, to rehab or leave it as emergency credit line but most likely, purchasing cheap distressed houses in PA like 20k, 30k some. (Don't ask how I buy these)

Do you think it is still worth to apply this BLOC from the lender? This loan will be 2nd lien from the rental property and 1st lien will be not paid off for now.

If theres another better way, I will definitely welcome to the opinions!

0 Votes

I found a really good deal in PA and the seller is asking $35k and rehab will be around $20k so I need around $48-50k.

Need a fast closing lender.

Have a fix and flip experience.

Credit score: 721

0 Votes

Quote from @Chris Barrett:

The properties need to make money, otherwise what's the point? At current rates, it would be extremely difficult to have maximum leverage and have any property pay for itself through normal rental income.

Yeah but found some DSCR of 2 so

0 Votes

Quote from @Jake Baker:

@Hyeseong Park

Are you buying with cash just to get the deal? Why not just finance at purchase instead of paying double closing costs for a refinance?

Assuming the finance doesn't go well for purchase, I mention this!

0 Votes

Quote from @Travis Timmons:

You're getting way too cute. Life does not exist on a spreadsheet and this is not a sustainable strategy.

Transaction costs, seasoning, pre-payment penalties, DTI impacts, minimum lending requirements (more than 50-60k), and a long list of other issues make this a bad strategy.

Buy 1 and see how it goes. Slow and steady still wins the race.

explain nicely

0 Votes

Quote from @Katherine Blazer:

It's a great plan. Normally cash-out refinances are capped at 75% and of course, they will need to cash flow positively with principle, interest, taxes, and insurance. You will also want to confirm the loan and asset values minimus. Some banks really like $100,000 loan amounts. And it sounds like you are really looking for delayed financing.

So your numbers may be a little off but it is doable. Where is the original $70,000 coming from?

$70,000 * 75% = 52,500. You could then do the $24,000 down on the next one, but you would not need to do the refinance. Your original loan amount would be $96,000. so you would have around $42,000 of the original $70,000 in down payments. You will also have closing costs.

yeah like delayed financing. But yeah wow, then people don't really have to get active income from flipping business or something like that if I do cash out refi well. 70k is when coming from my pocket.

0 Votes

All Forum Posts by: Hyeseong Park

Hyeseong Park has started 22 posts and replied 63 times.

Post: Thoughts on BLOC 12% Loan for Holding Costs

Post: Thoughts on Using Bloc 12% Loan for Holding Costs

Post: 12% Apr Bloc still good idea?

Post: 12% Apr Bloc still good idea?

Post: 12% Apr Bloc still good idea?

Post: Any lender available for $45k loan for fix and flip?

Post: Regarding Cashout refinancing

Post: Regarding Cashout refinancing

Post: Regarding Cashout refinancing

Post: Regarding Cashout refinancing