We buy fixer uppers. Often times we're buying property for $.50-60 on the dollar and after repairs we're into the property for $.70-75 on the dollar. Sometimes we'll use hard money for acquisition/rehab financing and then we look to refinance into bank money. Banks want to lend based off our 'cost' (acquisition + rehab) and not based off the value of the property which leaves us out of pocket a fair amount. Example:

Purchase Price: $50k. Rehab: $25k. Cost: $75k. ARV/After Rehab Value/Market Value: $100k.

Who will lend us $75,000 (75% of market value) rather than $56,250 (75% of our $75k cost)? We aren't looking to pull cash out.

If it matters...we aren't rookies...we are a HomeVestors franchise and we're also licensed in real estate (Broker and Salesperson).

With that said, you may pursue a visit to a local credit union as I have had relationships that have found success in pursuing loans based on value in lieu of cost.

I'm not in the credit union world so I don't know what kind of regulatory pressure they have to deal with, but my experience tells me you are likely to find success with them before an FDIC regulated bank.

Private lender?

That's an option. You in?

jmazz...Love to chat. I think you have my number correct?

I'm assuming you're having trouble finding lenders that will give you cash out after you complete the transaction. I think that will remain the story for a while. Banks are weary of a decline in market value in the coming months/year.

You may want to consider a DSCR lender. Rates are slightly higher than banks, but not hard money levels.

https://stronghill.com/

https://www.easystreetcap.com/

Not looking to pull cash out. Simply looking for 'loan to value' versus 'loan to cost.'

I know of Easy Street. Will look into the other.

Yes. Will call you tomorrow.

Yes. Somehow I missed this original post but see it's still very fresh. I am interested in discussing private money lending side of things. Had some development investments mature here recently and the financial markets are brutal right now. Real estate is what I do. PM me and we can chat. Thanks!

NPH- said:

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jmazz said:

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We buy fixer uppers. Often times we're buying property for $.50-60 on the dollar and after repairs we're into the property for $.70-75 on the dollar. Sometimes we'll use hard money for acquisition/rehab financing and then we look to refinance into bank money. Banks want to lend based off our 'cost' (acquisition + rehab) and not based off the value of the property which leaves us out of pocket a fair amount. Example:

Purchase Price: $50k. Rehab: $25k. Cost: $75k. ARV/After Rehab Value/Market Value: $100k.

Who will lend us $75,000 (75% of market value) rather than $56,250 (75% of our $75k cost)? We aren't looking to pull cash out.

If it matters...we aren't rookies...we are a HomeVestors franchise and we're also licensed in real estate (Broker and Salesperson).

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The problem you are facing is most lenders are under regulatory requirements to consider both the LTC and LTV and to lend at the lesser of cost or appraised value.

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Post the regulation

J Mazz text Jake, we have 4 banks that do this for us.

My company does this if you're still looking for a loan. Would love to chat

Tried pm'ing…didn't work. Contact info?