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Updated almost 5 years ago on . Most recent reply
Financing SFH based on ARV
**Disclaimer** - new to real estate investing!
I am looking at purchasing a 3b/1br single family home as a rental property. I believe that I could purchase for around $40,000. After looking at comps in the area on MLS, I am fairly confident that I could sell for $75,000 after a few repairs, fetching a rent around $800/month after renovations.
My question is around deal structure with a local bank: does anyone have experience with receiving financing based off the ARV? For instance, are banks willing to finance based off 65% of ARV (total loan amount in this case would then be $48,750)? In this case, that would completely pay for purchase of property plus $8,750 towards repairs, and leave me with a free $26,250 in equity before cash flowing from tenants. Is this scenario too good to be true?
Obviously, the best way to find out would be to ASK THE BANK, but figured I'd check with the BP community before I began the conversation. Thanks in advance for any input!