Your Best Source for Rehab Loans

Transcription

1 Your Best Source for Rehab Loans We provide rehab loans for qualified real estate investors requiring capital to purchase and rehab investment properties. A leading rehab lender, Our Group is run by knowledgable and experienced lenders who are eager to help real estate investors succeed on their next rehab project. We offer competitive rates, interest only payments and no prepayment penalties or fees on our rehab loans. Take the time to find out why successful real estate investors and house flippers choose Our group as their only source for rehab loans. Our rehab lending is our only business. We currently provide rehab loans in fifteen states across the US: Colorado, Connecticut, Delaware, Florida, Georgia, Maryland, Massachusetts, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, South Carolina and Virginia. New York Investors: We do not lend in Queens, Bronx, Brooklyn, Staten Island, or Manhattan. Loan Terms for Private Hard Money Loans/Rehab Loans

2 As your rehab lender and hard money lender, real estate investors and house flippers can concentrate on purchasing a property and avoid spending time worrying about how to fund them. This will allow you to purchase a property below market price and perform the necessary repairs to enhance the value and saleability of the property. Let us be your funding source. Our terms below will be based upon the characteristics of the borrower and the term of the loan. Our basic terms on private hard money loans/rehab loans include: Repair Funds Up to 100% of repair cost Points points (paid at closing) Interest Only % (payable monthly) LTV Up to 65% (Based on After Repair Value) On most loans we will fund 100% of the purchase and rehab costs up to 65% of the After Repair Value (ARV). States Colorado, Connecticut, Delaware, Florida, Georgia, Maryland, Massachusetts, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, South Carolina and Virginia only. Term 6 12 months You must sell or refinance the property to pay off the loan Credit Score 620 minimum FICO scores below 620 will need a co borrower or guarantor Loan Size $50,001 to $750,000 Minimum loan size is $50,001 We're Here to Help How Much Cash Do I Need to Bring to My Loan Closing?

3 Closing on a loan to purchase a fix and flip house can be a very stressful time. There are many details you will need to be ready to handle in a short time, including making sure you have the liquid funding to close your loan. Using some simple math, (yes, its simple!) you can figure out the amount of cash you will need to make sure your loan closes on time and with minimal stress. Lets start with the basics: First, calculate how much money you will need to purchase and renovate your fix and flip house. This is what we refer to as the Total Project Cost. 1) Purchase Price + Rehab Costs = Total Project Cost For example, if you are buying the property for $65,000 and you need $35,000 for rehab, your Total Project Cost will be $100,000. Next, well use a formula to find 65% of the After Repaired Value of the property (ARV). 65% of ARV is the highest amount you can borrow within our terms, or your Maximum Loan Amount. If you are unsure about the ARV, remember that your appraiser will provide one based on the current local market and your proposed renovations. Use the ARV of your project to calculate your Maximum Loan Amount using the following formula: 2) After Repair Value X.65 = Maximum Loan Amount

4 Following our example from above, RFG would be able to lend you up to 100% of your Total Project Cost ($100,000) if the ARV was at least $154,000. This is because $100,000 is 65% of $154,000. As long as your Maximum Loan Amount is GREATER THAN your Total Project Cost you will not need to bring extra cash to closing. You can calculate the amount of cash you will need using the formula below: 3) Total Project Cost Maximum Loan Amount = Cash Needed at Closing [not including closing costs] In the above scenario, if the ARV is LESS THAN $154,000, then RFG would not be able to lend you 100% of your Total Project Cost. Lets say that for this project your ARV is $145,000. Your Maximum Loan Amount would be $94,250 (which is 65% of $145,000). As the Total Project Cost is $100,000, the difference between Total Project Cost and Maximum Loan Amount is $5,750 ($100,000 $94,250 = $5,750). You would need to bring this $5,750 in cash to closing to be applied towards the purchase of the property. Since ARV is calculated using the planned renovations you have already submitted, you wont be able to reduce your Total Project Costs without also lowering the ARV. This will also lower the Maximum Loan Amount. If your project requires more than 65% of the ARV, you will be responsible for bringing the difference to closing.

5 A final limit on the Maximum Loan Amount is that RFG will not fund more than the appraised as is value of the property towards the purchase price. Dont forget about the other costs not covered by your mortgage... In addition to the monetary difference from above, you may need to bring additional cash to cover closing costs, which include title and insurance related costs and lending fees. These costs must be paid with your own funds regardless of your loan amount or ARV value. Remember, you will also need to use your own funds to make the monthly payments due on the loan as you are flipping the property. Why we loan up to 65% of ARV... Its important to understand that if the Total Project Cost is significantly more than 65% of the ARV, it becomes more likely that the project will be unprofitable. A flip with a small profit margin will require the same amount of work and risk as one with a much larger margin therefore you are better off looking for a better flip than accepting a smaller profit. A common mistake that borrowers make is to underestimate the profit margin needed to make the project worth their time and effort. For example, $124,000 for purchase and rehab with a $154,000 ARV will not work out, though it looks on the surface to be a $30,000 profit. Carrying costs, realtor fees, transfer fees, and other expenses will consume the supposed profit and dwindle it down to a figure that isn t worth the time, effort, and money you will invest in the project. we offers 65% of the ARV because that is where we know our

6 borrower will be successful and earn a generous profit if the project is managed well. Being thorough in your diligence is essentially the message of most our articles, but even more so in this one. As the borrower on a project where you expect to make a healthy profit, no stone can go unturned. You need to have a plan. When that plan goes awry, your plan will have a backup plan. There is always an unforeseen problem, but you need to be ready and have a lender who is willing to put in the same amount of time and effort as you. PROPERTY TYPE Residential, non owner occupied 1 4 family residential investment properties located within our lending area: Colorado, Connecticut, Delaware, Florida, Maryland, Massachusetts, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, South Carolina and Virginia only. LIEN POSITIONS First mortgage only STANDARD TERM 6 12 months

7 REHAB FUNDS We lend 100% of the repair funds and 100% of the purchase price, up to 65% of the After Repair Value. RELEASE OF REHAB FUNDS Rehab funds are usually paid in one to three draws after verification of repairs, and mailed to you or wired directly to your account. POINTS Paid at closing CLOSING COSTS Paid at closing GUARANTEE Personal guarantee required REQUIRED DOCUMENTS Completed lender loan application & supporting documents, including, but not limited to: (i) Two years of federal tax returns (both personal & business) (ii) Three to six months most recent consecutive bank statements (both perso

8 LOAN DOCUMENTATION Purchase Agreement Detailed Repair List itemizing cost Builders Risk or Liability Insurance prepaid for term of loan Inspection Report verifying work to be done and cost (obtained by US) As Is and After Repair value Ap QUICK CLOSINGS Once a borrower has been approved, closings can be held within a few days of receipt of appraisal and inspection reports along with proof o f payment. We are always looking for ways to develop long term, strong relationships with our clients and partners. Let us know how our rehab loans/hard money loans can help you!