75% ARV
Hi Everyone,
I am a new member and investor and I have a current opportunity that I'm considering. Below are the specifics of the property:
Property Being Sold In "As-Is" Condition. Priced To Sell!!!The Inside Of The Property Is Basically A Shell. It Needs A New Roof, Plumbing, Electrical, And Heating Work Done. The Estimate Is About 40 To 50i Worth Of Work. Please Only Interested Propects. The Owners Does Have Floors Plans Accessible For Serious Persons. Floor #1 Could Be An Efficiency With A Two Bedroom. Floor#2 Could Be A Two Bedroom And Floor #3 Could Be A 3-4 Bedroom Unit.
I've gone to a bank to research my financing options and their offer is this:
A 75% ARV loan with 2.5 points; Interest rate of 6.99-8.99%; Loan term of 6-9 months. Also, my contractor has to complete forms documenting the estimated repair costs.
Is this a good deal? Do I want a loan that only covers 75% of the ARV? Is this practical? Please share your thoughts with me on this scenario.
Thank you to all who respond. 
Well, you didn't say what you plan to do with it, once you got it. What kinda cash flow are you looking at once it's rehabbed? What's your exit strategy? Can you buy it and fix it up with 75% of ARV?? Some of them will take more to buy it and fix it up, than you can sell it for. What about a scrape and replace? Would that be cheaper? scrape and replace = tear it down and build a new one...
I'm sorry, I left out some details. My plan is to purchase the property (it's listed at $85K), rehab it and rent out all 3 units. The listing estimated repairs at $50-60K.
Between all 3 units I should be able to get $1800/month.
My exit strategy would be to re-sell it if things didn't work out.
I usually only get 60% ARV ,so I think it's great. :-o
As a rehabber 75% would leave me with cash at close
[addsig]
Sounds like a good deal to me.
looks good from the numbers you provided.......kenmax