Major Rehab
I have a contract on a property that is $19,000 with $45,000 in rehab costs. After repair value will be $95-
$100,000.
What is a creative financing technique that I could use for this property? I have @ $20,000 that I could put into this property myself. Of course I would like to use the minimum amount of my money to make this deal work. Total fix up time is 3-4 months. Any info. is greatly appreciated.
Thanks.
Other than a conventional construction loan, maybe a hard money lender of up to 75% ARV (after repair value) if you can get it. They may look at credit or colateral. If you turn it over you probably won't care much about the interest rate.
My company recently took on a similar type of deal, we purchased at foreclosure for $117K, put in about $60K for renovations, and we are looking for just under $300K. Initially, we were going to go through a hard money lender but they all wanted points up front or their fee was 15%-25% of the loan value. What we ended up doing was borrowing money from a friend, whom we paid 10% after 3 months and 1% per month after that. It worked out really well. We made a frind $14,000 in 3 months for borrowing $140,000. I would suggest talking to relatives or friends who can afford to loan out the kind of money that you need and you create the terms. Basically, its a short term, risk-free (providing you did your homework with the property) investment for them.