Financing A Rehab
Im currently trying to arrange financing with a hard money lending institution in florida.
Basically they will finance 65% of the ARV, at 16% simple with a one year max term. Also they charge 10% and that covers all closing costs etc.
They start requiring payments after one month. Is this standard? Does anyone know of a company that will finance rehabs that will give me a longer period before i have to start paying the mortgage? A month isnt even enough time for me to do the repairs, much less actually market the house and sell it.
If anyone has any comments, suggestions, please leave them here,or pm me.
Thanks
Your guy sounds normal. The payment is that a full payment or interest only?
I know one that has a plan with no payments for 6 months. But rates are higher and require a 650 FICO.
Feel free to drop me a PM.
interest only.
Myfico score is like 680, even with a bankruptcy... thats my problem. I had perfect credit... i had a car wreck, the chick sued me, and then my insurance company recommended i cover my assets by filing bankruptcy... it also wiped out a considerable credit card debt. maybe it wasnt the smartest thing to do, looking back, but whats done is done. its been over 2 years,and i have better credit than a lot of people that havent been through bankruptcy.
But, it still shows bankruptcy. Thats like saying "wow that Yugo is in perfect condition" its still a yugo.
lol
I may have a source for you that specializes in 100% rehab financing and I believe thay only require a 680 FICO.
PM me and I'll try and find it for you.
C-
I agree with lacashman, that that HML sounds pretty normal, however if you would like better terms, maybe you should try looking for a Private Lender...that way you can try to negotiate more flexible terms...HML are usually pretty much set to their investing criteria.
Was this guy eating a big plate of spagetti and sitting in the back of a dark Italian restuarant? Sounds like loan shark rates to me. Unless your part of the country is different then mine I would look around, 10% origination fee???!!! That alone would make me gag.
lol no. but i dont know of many traditional finance places that will loan you money based on the after repairs value of the house.
Quote:
On 2003-12-28 10:00, rebloodhound wrote:
interest only.
i had a car wreck, the chick sued me, and then my insurance company recommended i cover my assets <IMG SRC="images/forum/smilies/icon_smile.gif"> by filing bankruptcy...
lol
It sounds like you not only need a new insurer, but why did you file the BK if you had insurance, were your limits insufficient? Not that it matters now, but the thought of an insurer convincing you to file the BK scares me...
I dont know if iam reading right ,but 10% fee, that makes me shutter. The avg home in san diego is 450,000 10% of that?
On a traditional mortgage Origination fees usually run abt 1% of the loan. However, even for a HML 10% is pretty darn high. I've usually used HMLs that charge between 2-3 points.
Quote:
On 2003-12-28 16:05, norrist wrote:
Quote:
On 2003-12-28 10:00, rebloodhound wrote:
interest only.
i had a car wreck, the chick sued me, and then my insurance company recommended i cover my assets <IMG SRC="images/forum/smilies/icon_smile.gif"> by filing bankruptcy...
lol
It sounds like you not only need a new insurer, but why did you file the BK if you had insurance, were your limits insufficient? Not that it matters now, but the thought of an insurer convincing you to file the BK scares me...
Yes, my insurance limits were only 20k, thats my fault i guess... There were two poeple in the car... they got some quack to say they were permanently injured even though they got out and walked to the ambulance.
rebloodhound - you are correct that there aren't alot of places that will lone you money on the after fixed up value, but my point is unless you have talked to a dozen hard money lenders and the best deal you are getting is the one you are writing of here, I would keep searching.
I have been offered these loans at 1.5% origination with 13-15% interest for 12 months. At the end of 12 months they will do another 6 months automatically for 1% again.
Like I said, your part of the country may be different then mine but I'm not convinced that it is a different as 1.5% to 10% for origination.
I understand. Im not sure how much difference this makes but there 10% includes all closing costs, fees, etc. The only reason I am interested in this company is because they have a local rep who will come out, look at your property, estimate the repairs, and then prequalify you asap. So it is convenient, but expensive. They came recommended by the local rei club
Quote:
On 2003-12-28 17:57, rebloodhound wrote:
Quote:
On 2003-12-28 16:05, norrist wrote:
Quote:
On 2003-12-28 10:00, rebloodhound wrote:
interest only.
i had a car wreck, the chick sued me, and then my insurance company recommended i cover my assets <IMG SRC="images/forum/smilies/icon_smile.gif"> by filing bankruptcy...
lol
It sounds like you not only need a new insurer, but why did you file the BK if you had insurance, were your limits insufficient? Not that it matters now, but the thought of an insurer convincing you to file the BK scares me...
Yes, my insurance limits were only 20k, thats my fault i guess... There were two poeple in the car... they got some quack to say they were permanently injured even though they got out and walked to the ambulance.
Sorry to hear your Agent didn't give better coverage advice. Thanks goodness they weren't "really" hurt. Happy New Year!
rebloodhound - if the service you percieve them giving you is worth what? $5000, $10,000, $15,000 more money out of your pocket then go for it.
Keep in mind that they aren't doing you a favor by loaning you money, anybody who is going to loan you money is doing it to benefit themselves financially. It is a business arrangement, not a friendly favor.
Personally, I wouldn't pay somebody that kind of extra money out of my profit just to do something that they should be doing anyways.
But, it is all about percieved value, I wouldn' t pay someone $50 a month to pick up the dog poop in my back yard, but there are people who gladly fork over twice that.
If that makes you comfortable using them, then go for it, but you asked for comments and suggestions, I'm suggesting that there are much better deals out there if you want to find one.
I would also take recommendations from your local REI club with a grain of salt and maybe a big bag of scepticism.
Recommended by a successful, honest, long term realestate investor and just being a speaker at your club are vastly different, as is anything in between the two.
Some clubs are excellent resources with honorable intentions and others are thinly veiled farming grounds for savy investors to cherry pick and take advantage of new investors. Be wary if 75% of the people in your club are new members. This is a huge churning ratio and a sure sign that all is not what it seems on the surface.[ Edited by The-Rehabinator on Date 12/29/2003 ]
Well i definitely know they arent doing me any favors... the cost of this money makes me want to puke. I almost soiled myself when i figured out the "interest only" payments at 16%. I dont really perceive it as a good value, but if its my only choice, or at least the only one i can find, and i can still make some money, I might have to do it, until i can find something else. I guess some profit is better than no profit. Im not arguing at all, so please dont take it that way, I am taking into consideration all of your comments and learning what I can from them. They are all greatly appreciated.
So obviously there are cheaper ways and sources to fund this project... i need to find one!