Does anyone know if they offer home loans that cover the cost of the house, as well as renovations? I am not looking for 2 seperate loans. Just one single loan.
2007-08-05 05:58:52 · 6 answers · asked by Anonymous in Business & Finance ➔ Renting & Real Estate
Yes there are loans available for this, but the interest rate is high, and you will generally need to put cash into the deal.
It is called fix and flip or purchase/rehab financing, generally offered by private lending companies, otherwise known as hard-money lenders. They justify the rate by saying "it's not the cost of the financing but the availability of the funds that matters."
Many investors will attempt to refinance themselves out of this type of loan with a traditional mortgage immediately upon completion of the work if they don't have a buyer yet, this will require a refinance loan with "no seasoning" requirements.
Generally, most traditional lenders will not loan against the after-repaired-value of a property, which limits their involvement to the current value of the home. Requiring cash for the rehab.
It is rare but there are a few traditional mortgage lenders that advertise they will loan against the after-repaired-value.
Using the right combination of search terms in an internet search engine might render some usable results.
2007-08-05 06:24:20 · answer #1 · answered by LadyB!™ 4 · 0⤊ 0⤋
Hi,
Yes, loans of this type are made by hard money lenders. They will typically lend up to 65% of the after repaired value of the house. The loans are actually based on the value of the property rather than your credit, but your credit is becoming more of a factor in these deals.
If the cost of the property and the rehab is 65% of the ARV or less, then you can probably get a hard money loan. BUT, be warned. Hard money lenders usually charge 5 points on the loan and 15% interest. Payments are interest only and usually have a 12 month balloon.
If the property you are considering meets these parameters and only if you are an experienced rehabber, this may be the way to go for you. If not, you may want to hook up with an experienced investor/rehabber. Half a deal is better than no deal.
I have a free Hard Money Directory on my website: www.therealestatebirddog.com. Most are brokers -- middle men. Some are direct lenders. Do your due diligence.
Best of luck to you,
Barbara
www.therealestatebirddog.com
2007-08-05 16:37:16 · answer #2 · answered by realestatebirddog4 2 · 0⤊ 0⤋
None of which I am aware. You will be able to negotiate a mortgage certainly not to exceed the appraised value of the property, and may be required to place a specified percentage of the purchase price as a downpayment, since this will not be an owner occupied property, but rather an investment.
Any additional expenses for which you need to borrow should be handled either in a HELOC, if available, or a construction loan.
2007-08-05 06:03:41 · answer #3 · answered by acermill 7 · 0⤊ 1⤋
I know the Market is slow, that is obvious! However, because the market was so hot and mortgage companies were financing everyone now is a good time to buy because there are lots of foreclosures taking place. One of the easiest ways to get updates on foreclosures contact a few mortgage companies in your area and get set up on their weekly foreclosure lists. So if you are not in a hurry to sell and live in your "flip" like THE WIZARD suggested you can make some great profit. In addition, learn how to do it yourself and save money on labor. Good luck and have fun.
2016-05-19 04:23:38 · answer #4 · answered by ? 3 · 0⤊ 0⤋
The only way to flip a house with no money is to work with an investor. Usually you can find one that will lend the money for repairs, you do the work and then when it is sold you get a percentage of the profits. Not all investors work the same way though so interview them.
2007-08-05 06:10:14 · answer #5 · answered by Anonymous · 0⤊ 0⤋
IF you do not have enough capital to cover the renovations you should not be "flipping" houses.
2007-08-05 06:04:21 · answer #6 · answered by Anonymous · 0⤊ 0⤋