All Forum Posts by: Paul Wakim

WOW! Thank you, @Patti Robertson, @Marty Johnston and @James Rodgers for the quick replies. 

SO... Patti I am taking your advice and going to speak with a commercial lender this week luckily I have another family friend who is a commercial lender at a small local bank. I will also be sure to disclose my intentions with the bank. Thanks for the great advice

James, I do believe the owner owns the properties free and clear. I will certainly look into this and as if they are interested in financing. 

Marty, the terms of the deal Wells Fargo is offering are is 15% down at a 5% rate. I know the rate will be slightly larger but I know what I had discussed with my lender was around 5.0%. This also does not include closing costs. The LTV (from what I understand) will be assessed once the bank has vetted the contractor and the plans for the renovation. The loan will be based on that assessment. I will be PMing you shortly.

Happy New Year!

Hello everyone, I am brand new to bigger pockets and have decided to join and make this post to get some help from the rest of the members. 

I have not done a deal yet but I have my team set up and ready to go once the deal is found and financing is set up. 

Financing is my primary question. I have decided to go to a family friend who is a mortgage banker at Wells Fargo to get pre-approved for a traditional mortgage. I am expecting that I will get approved for a $400K loan.

The deal that I'm currently vetting and hopefully acquiring involves 3 properties (row houses) side by side. My plan is to purchase all 3 from the owner at the same time, renovate 1, move into it and renovate the two others next door. Once renovations are done on one I will put it on the market and sell. Then I will do the same for the two remaining properties. 

These 3 houses are all in similar shape and are listed for $50-$65K each. I know without a doubt they will sell for $200K+ each. They will each require roughly $60-$75K in renovations, possibly more. I will be doing some work myself. 

SO, here's my question... My mortgage lender knows that I will be buying to renovate and flip and has offered me a loan that covers both the home mortgage and the renovations for 1 flat fee. However, that loan process involves other contingencies like the bank vetting the general contractor who will be doing the work and the cost of the renovations which could possibly extend the closing time to 60 - 75 days.  

I see this situation as having two paths. 1, I take the loan for both renovations and mortgage and run the risk of closing the deal slowly. I am worried about doing this because I feel like that time frame is unrealistic for investment properties where multiple parties are interested. Couldn't the deal be taken out from under me in the case the closing takes 60 - 75 days?

And 2, I take a loan out as just a mortgage, use a contractor who is not vetted by the bank and get a traditional loan from the same bank or another to cover the renovation costs. 

I have not given private lending or hard money any thought at this point due to my lack of experience.

Has anyone had any experience with financing options such as this?

Should I be worried about the extended closing time? 

Any advice is greatly appreciated!