All Forum Posts by: George Despotopoulos

Hey @Lesley Ray:

What's the purchase price of the duplex? When do you need to close by? 

@Brian Garrett -- happy to discuss that. 

@Alejandro Lozano with a 610 you would qualify with hard money or bridge lenders for a fix & flip or rehab to hold project (BRRRR). Most of these lenders will require some experience to lend to you. Also, if you're seeing your score at a 610, there's a chance it's lower when a lender pulls credit. In the situation where a FICO score is below 600, most lenders would like to see compensating factors like: experience/track record, low LTV, high reserves/liquid assets, etc..

If you give us some more background info on yourself and the numbers around the deals you're targeting, then perhaps someone can point you in the right direction for financing. 

Andrew, you can always give me a call at the number in my signature. Happy to chat. 

@Larissa Pacifico - not sure what your experience in real estate is -- how many have you purchased? How many completed flips/rehabs do you have? 

1 point for a bridge/hard money loan is pretty unheard of unless you're doing significant volume with one particular lender. And because of this relationship the lender is giving a discount. 

If you're looking for only acquisition funds, then 12% is a bit high for a 740 FICO on a straight bridge loan. But, if you're getting funding both on purchase AND rehab costs, then 12% is not unreasonable, although it may be a bit high for someone with experience and a solid FICO score. Purchase + rehab funds are usually around 10% - 12% and 2.0 - 3.5 points.  

I don't know of anyone in the hard money or bridge space that's offering 0 points. 

Hey @Erich Bradburn -

Most hard money or bridge lenders have a minimum loan amount of anywhere between $75k - $150k (varies b/w lenders). You can use this strategy for rentals that you're buying in poor shape/condition but one that you can add value through renovations/rehab. 

You would take a hard money or bridge loan at the outset. The lender would finance part of your purchase and part of your rehab (or perhaps all of it). You fix up the property, get it rented, and then refinance the hard money or bridge loan into a long term rental loan based on the property's rental income. 

The rates for hard money or bridge loans depend primarily on your FICO score, experience in rehabs/flips, and how much leverage you're getting (the higher loan-to-cost, the higher the rate). Generally it can be from 8.5% - 12.5%. You also pay an origination fee, which can range from 2% - 4%. 

Most lenders lend 75% - 90% of your purchase, 75% - 100% of your rehab budget, as long as that total loan amount is 65% - 75% of ARV (usually it's 70% ARV).

Hard money or bridge lenders look at the property you're looking to finance & the numbers around your deal. In addition, they'll want to know your experience rehabbing or flipping. 

Hey @Mark Weinstock - if you're just looking to pull out $100k, a bridge loan could be another option. You would need to have the property insured up to the lender's loan amount (most do up to the appraised value). On bridge loans, you make monthly interest only payments and pay back the principal at the loan's maturity date (12 months from closing). Usually these loans do not have a pre-payment penalty, so you can make periodic, or sporadic, payments on the principal to bring you loan balance down. This may be a great option for the investment property. Fees are usually 2% - 3% of the loan amount as an origination fee, you pay for an appraisal ($550) or BPO ($215), and whatever title charges for the lender's policy (on a cash-out refi around $100k, it should not be much) and to record the new documents required. 

As for paying in cash -- that wouldn't be possible with a bridge loan (I don't think the servicer or lender would accept that). But, setting up auto-debiting from one of your accounts is. 

Hey @Alex Scaffold - if you're looking for a fix & flip loan (bridge or hard money), then no, there is not a specific period of time that the entity must be formed in order to lend to it. The members/principals of the entity would serve as guarantors and their personal account statements would be used to verify things like reserves/source of  downpayment and they would have their credit reports pulled. 

A guarantor is not needed if the lender is extending an offer of a non-recourse loan, which is rare in the fix & flip space. Also, a guarantor is not needed if the loan is to an individual, since in that scenario there is already personal recourse to the borrower. 

@Regina Jones - usually lenders will not allow for another lien against the subject property. Also, most lenders will require that the source of the down-payment comes from the borrower's own funds/assets. 

@Account Closed - 

Are you saying you're going to pay a GC $160k upfront to do some work to your property and when the GC is done and you hit that ARV (hopefully), you'll cash-out refi and use the proceeds to pay him the remainder of his invoice. And you're asking how to best structure this?

Just wanted to clarify! 

Also, it might help to let us know: When did you buy the property? What was the purchase price? How much have you spent in renovations thus far? What is the current debt of the property and what do you believe the as-is value to be? Also, what do you expect the ARV to be?