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Updated over 9 years ago on . Most recent reply

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58
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Jeff L.
  • Investor
  • (Raleigh Durham area), NC
5
Votes |
58
Posts

Need Funding and Advice Please

Jeff L.
  • Investor
  • (Raleigh Durham area), NC
Posted

Would appreciate any advice on my funding needs situation-

I have locked up a NOO vacant SFR for a purchase price of $56k-the owner owes $56k. We have agreed to a "Subject To" purchase whereby I assume the payments while I rehab. I am wrapping up the Sub To deal and the Deed will transfer to my LLC on July 9th, 2015. The mortgage is current.

The ARV is $120k and I will need about $30k to complete all of the renovations and to cover holding costs. The current value as it sits is approximately $84K. When I made the OTP I was anticipating a personal loan from a family member in the amount of $28K but this persons financial situation has since changed and they were only able to loan me $10k interest free, which I have in my LLC bank account as I write this.

So, in reality I only need another $18-$20k to complete the rehab and list the property. The issue here is two-fold; Not many lenders want to loan such a small amount and my credit score is ugly. Unfortunately, I went through a tough divorce and loss of employment (was a university professor for 8 years) so my credit really tanked. My FICO is a measly 531 so I'll probably need a loan based on the deal, not my credit. I am self-employed currently but have been working hard to start this investing biz so I only show roughly 30k in income.

I am about to place another NOO vacant SFR under contract for $79K with an ARV of $124k and this one needs about $14k for repairs and holding costs. The mortgage is current. I am planning on doing this one Sub-To as well so all I would need is the money for rehab and holding costs.

Would this situation be favorable to a Blanket Loan? (if my understanding of a blanket loan is correct).  If possible, I would like to get a loan for both of these rehabs at once, if possible, making my total funding needs $34K. ($44K minus the $10k I have already.) If not I plan on taking the proceeds from the 1st rehab and rolling it into the second.

I and the owners are very aware of the possibility that the loan could be called due and there is a signed DOS Disclosure addendum in the OTP contract to that effect.

Any advice on funding options I might have? Thanks in advance.

J. Scott Lee

Most Popular Reply

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Jon Holdman
  • Rental Property Investor
  • Mercer Island, WA
14,127
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22,059
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Jon Holdman
  • Rental Property Investor
  • Mercer Island, WA
ModeratorReplied

Could you refinance that property your LLC owns? Its tougher for an LLC to get a loan than a person, and the lender will still investigate your personal situation even when lending to your LLC. LTVs are low on an investment property refi. 80% at the very most, maybe less. Do you really have equity given that LTV limit?

Even most deal based lender still look at your personal finances.

What about getting a job? Use that income for your rehabbing and having steady income will make it MUCH easier to get loans.

You might want to hold off on that second deal until you get your finding squared away.

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