Does This Formula Work When Using Hard Money?
I've read and seen on this website that one should use the following formula when calculating what to pay for a rehab:
APR X .70 - minus repair cost = purchase price
Does this formula provide an accurate figure when using hard money to finance the deal?
Yhagood
Yes,
If your HML will finance 70% of ARV, this lets you do a no money down deal. If they will only do 65% you can adjust your numbers as necessary. But 70% is pretty standard.
Works out nicely doesn't it?
Thanks for the response.
So, I don't need to factor in interest, closing cost, points, etc?
Yaisa
Exactly right. That's why when you increase the number to say 80 - 85% as some here sould say you endanger your ability to profit from the job.