Rehabbing Without Any Money
Very interested in rehabbing but don't have much cash. Question: I know that there are loans out there that you can get "subject-to" appraisal and so forth. So lets say I buy a place for 50k, ARV is 200k and it needs 50k in repair. Can I get that loan for 100k to buy and fix up the place, and not have to make payments on it until its complete? Ideally I would put an offer, get the loan, close, start fixing all the while marketing the thing and hoping to sell it before I start having to make payments. Is the possible? If not, what are some other solutions? I can't afford to make two mortgage payments just yet.
I know there are several companies out there that will lend 65% of the ARV. Some, depending on credit have programs with deferred payments. One that comes to mind is rehabfunding. Check out their website. I have talked to Bob over there and I have heard good things about him on other boards. I haven't done any deals yet but when I do I plan on calling him again. Good Luck!
When you are first starting to do rehabs the easiest way I know to get money is through hard money www.lenders.Most do not care about your credit only about the security for the loan.What they will offer is a 50-65% LTV loan of after repair cost. Their terms are high cost,usually 5-10% origination fee and 12-18% interest,but it beats the alternative losing deals waiting on a bank to approve a loan.
hard money is the way. Just make sure to calculate holding costs, sales/marketing costs, closing costs, and rehab costs LIBERALLY to determine at what price you need to buy to make your needed profit.
Most rehabbers figure 20% of ARV is acceptable profit. Good luck, Dave
Thanx for the replies. Generally when do you start paying back these loans? Ideally I would buy the place an acceptable price, start to rehab it, and in the meantime market it and try to sell it before I have to pay back the loans. I realize that's ideal, but is it possible?
Hi Jeff,
Another thought is to use Private Money. I use this money on almost every transaction. Once you find these individuals, it is the easiest money that you can find.
http://www.thecreativeinvestor.com/modules.php?name=News&file=article&sid=437
Best of Success!
BAMZ
Jeffm 60
The time has come, the walrus said, to look carefully at your position and see what it is that you really have to offer.
Can you do a rehab all the way and have you prior experience in this most challenging of real estate activity. This is no spot for someone who sits on his hands and believes that all things can be done on paper and from a distance.
If you are experienced and can point with pride to more then a remodeled bedroom, you are truly ready to go.
What you lack is the fundage and that is available by putting an ad in the paper, or going to the local investors club, or go to the Note Buyers Club and get yourself a partner. No not just a lender, but a partner. You say you do not wish to make payments or be bothered with payoffs etc. You need a partner. You need a partner that is greedy for high return and does not wish to work. Having gained capital his theory is that the little green things should work for him.
So you do a few deals and watch a goodly share go for the use of money. It was always so do not take a stance, just accept that this is what it is.
In time, if you save your money, stay away from declining balance investments like auto's, good meals, heavy dating. You may accumulate monies and on that great day you may raise your clinched fist aloft with one digit fully extended and proceed on your lawfull occasions solo at last.
Cheers Lucius