I met with a banker today got approve to buy single family homes and rehab them. The banker said that they will lend up to 80% of appraised value. Also he said he will need a repair list. My questions is on the repair list do I need to Inflate the numbers to make sure I’m covered or is the bank going to lend off the appraised value?
The lender is not going to lend more than 80% of what the place is worth.
What are you thinking you could accomplish by ‘inflating’ the cost of repairs? I am not sure what you want to ‘cover’.
If they are going to lend 80% of value why do they need a repair list?
I used to work with a bank that was giving me 75% of the AFTER REPAIR VALUE. The appraiser would take the list of repairs into consideration when doing the ARV appraisal. Sounds like you need to clarify what the bank is actually offering.
Some lenders will split the way they evaluate the security for their loan. They will focus on X% of the present, as-is value. They will then use a different percentage to cover the work that is to be done while checking that the ARV still stacks up. A subtle difference and not all that common. A lender who is more local who already knows your business model can work this way.