Do they relly loan 70% ARV?

Question

I have contacted several lending companies in South California, I don't really opt to use the one's that requires credit, for some business reasons.

Are there companies that loan you the 70% of ARV? Are they much more expensive than the ones offering 70% ARV on their website but whenever I call them or send them a scenario of spending 250k (max) to sell 300k and they hit me back with a figure of 40-60k in the bank on top of the fact that they only loan out 70% of purchase price and not ARV.

Are there companies that roll all costs at the end so I could work on more properties?

I guess what I am trying to achieve here is better cashflow. Instead of flipping one house at a time, with all financial backing and not have to worry about running low on funds or waiting for funds to arrive from other sources, i could do more for the downtime. Downtime being, waiting for permits or bids or inspection and etc. Any suggestions or referrals, let me know, either pm or reply or email is greatly appreciated. Thanks for the help.

Wendell De Guzman · Answer

Yes. I am a private lender and I can lend up to 70% of After Repair Value. I will lend all day to any rehabber who is:

1. experienced - I need to see at least 5 HUD settlement statements, pictures of prior rehab work

2. liquid - with adequate reserves (6 months of rehab loan interest payments in his bank account)

3. good credit is preferred specially if you are not that experienced

By the way, $250K/$300K is not 70% - that's 83% LTV.

Lastly, I prefer one with "skin in the game" (10-20% downpayment - with me funding 80-90% of the project cost).

If you don't have any experience, any money or any credit, approaching rehab lenders or hard money lenders is NOT an option. You will get better results if you look for a partner (and in exchange, you give that partner 50% of your profit).

Nathan Emmert · Answer

Always remember the golden rule... he who has the gold, makes the rules.

It's no different then a store advertising "Up to 60% off!!" only to find out the 1 item they have 60% off is a $1 bookmark up front marked down to 40 cents, the rest of the stuff is on a far more modest sale...

Or a more relevant one, 3.275% APR!!!  If your credit score is over 800, you have 0% DTI, and get God to co-sign type restrictions.

Ads are marketing... they are made to draw eyeballs and generate calls... not to be fully forthcoming with the whole truth.

Nathan Emmert · Answer

Sure, there are plenty of lenders who will loan to 70% ARV... but probably not to people they've never worked with before.

You can argue all you want that their investment is covered by the property... but frankly, they're in the business of collecting interest payments, not foreclosing, fixing, and selling to recoup their investment.

Walk, then run.

Manolo D. · Answer

I might better luck attending REIA, not really a home-builder. 3 year s is not a long time at all, this is a long game, not a one time big time shot. What do you mean by the last statement? Not really getting that. Thanks

Manolo D. · Answer

Actually loan amount was 210, but with interests, closing, and expenses between purchase and selling, maybe its around 40k. im not looking to loan 250, only 210 but allocated 40k as max expense. I would be acquiring the loan thru my company, and I am not comfortable exposing personal assets or credit, never had, never will. Credit might be based on my duns number credit score, but everyone knows they want money before they work for your true company credit score. We have 6 months worth of interest in the bank, but if the lender wants to lock that in, we couldn't guarantee that it will be dedicated to that project. With that said, my choice is only to partner up, or maybe somewhere around the multi family area, since my commercial and hospitality works "sort of" similar to those, multiple similar rooms.

Lucas P. · Answer

I agree. A track record with any particular lender will allow you to negotiate better rates and higher LTV. I have a HML that will go 100% on purchase price as long as it's a solid deal. But private money is best especially when they lend you 100% purchase and rehab, and then back end the interst payments! Love it!

Manolo D. · Answer

Im not sure about 80-90 purchase price, but i think 70% arv covers 100% purchase price and 100% rehab costs. but with that, we still have to account 10% costs closing and etc, and 20% potential profit. at leadt thats my formula

Stephen Goodman · Answer

In Phoenix there are several hard money lenders that say they will lend up to 70% ARV. If you are a newbie, they will likely reduce the loan amount offered because their assessment of ARV will not be as much as yours. After you can demonstrate a track record of successful flips, you should be able to get a loan that will fund up to 80% or even 90% of the purchase price, and sufficient funding for the rehab, up to a maximum of 70% of the real ARV.

Manolo D. · Answer

Yup, I am using these. In CA, i use MAO as starting MAO and directly let owner know that its my best and final offer.

Manolo D. · Answer

Hahaha, that is so true, thanks for that, it made me laugh out loud, literally. I need to do some more digging or JV.

Do they relly loan 70% ARV?

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