Posted by Nick on February 20, 2001 at 09:27:15:
I believe we can get into this property ~58K, 20k is a high estimate for rehab, it has 5 garages and we may hold onto this for a year or two at least. The rental market is good in the area. Should we think about using a credit line for the rehab rather than taking a 2nd mortgage?
203k program alternatives??? - Posted by Nick
Posted by Nick on February 12, 2001 at 13:58:00:
My partner and I are looking to get into a bank owned duplex. There was a fire in the house, it has been vacant for some time. The property needs ~20K in rehab. A fair offer for the property is about 60-65k. The market value based on comps in the area, is about 110k. We have outstanding credit and I understand 203k programs are not for investors. What are our alternitives for financing? Is there a way to get into this for very little money down?
Re: 203k program alternatives??? - Posted by Bob (Md)
Posted by Bob (Md) on February 17, 2001 at 24:46:31:
Find mortgage brokers who handle hard money. Most will only go 65% ARV, which is about $71.5k. If you have sterling credit, or can collateralize the loan with something else you may be able to get the 80-85k you need. Question - is there enuf room in this to make any money? With $85k to buy and rehab, that leaves only $15k to pay for holding the property, selling it, and your profit. I think you’re probably going to end up making $5-6k when it’s all said and done (if you’re lucky), and that’s probably not worth the hassle.
Rehab cost… $20k
Sales comissions… 7k
PITI pmts for 6 mos 9k
“Oops” buffer… 2k
Utilities?.. 2k
Profit… 15k
TOTAL EXPENSES-- $55k
Sale price $110k, minus expenses $55k leaves $55k as the absolute maximum price that you can pay and make a resasonable profit.
By the way, you don’t mention whether the bank might participate in the financing. They might do a construction loan, escrow the moneys pending inspection of work as it progresses, and have a baloon payment in 6 months or so. That way, you’d get the money as you need it and can refinance after the rehab is done.
But it still seems like 60-65 is about $10k too high if you’re gonna make anything on it.