70k cash how much BRRRR can I buy with hard money

[Kevin Marquez]

Hi everyone I have a quick question!

I saved up $70k this year and want to buy my first BRRRR. My only concern is when I get a hard money loan do I need 20% of the ARV (for acquisition and a loan for the renovation)

second how long does the refinance process take after I fix the house?

So yes, two questions. Or should I wait and save up 120k ish. I'm looking to buy a house below 200k with a 350-430k ARV.

My fear is that I only have enough money for the down payment and not enough reserves.

Thoughts?

THANK YOU!!

Kevin Marquez

Discoverkevinm

[Account Closed]

@Kevin Marquez the rates and terms vary by company, but as a general rule of thumb, hard money lenders will lend you 80-90% of the purchase price and possibly 80-100% of the construction costs. These loans usually come with a 1-2% origination fee which is paid right when you close on the property and carry a note rate of 8-11%. These loans are usually 12 month interest-only loans, with an option to extend for another 1% of the loan amount. 

The lender will want to see around 6 month's worth of interest payments in liquid reserves as well.

As an example, if the purchase price is $200,000 with $40,000 in rehab, they'll lend $160,000 for the purchase and $32,000 for the rehab loan, and expect you to put $48,000 as the down payment. You'll need to pay an origination fee of $1,920 at closing. They'll also want to see 6 month's worth of reserves in your account, which comes out to be around $9,600. On top of that, you also need to funds to do the first phase of the job, since construction loans are paid back by draws.

But in general, you'll need around $60,000 to do a job like this.