Hard money holding cost

[Account Closed]

Hey guys, 

I got a deal, which would be my first- a foreclosure which has some equity, just needs some tlc. I made an offer with FHA financing because I plan to live in one unit but the offer got denied because the seller doesn't want to have complications going through FHA. I need a low money down option to buy this property. So I was thinking about hard money, I'm curious as to what kind of average holding costs/ etc I'm going to be looking at if I buy the property at 90,000. I expect the property needs about $10,000-15,000 in repairs and expect the ARV to be conservative around 150,000. What would my avg holding costs be?

[Jeff S.]

In reality, your holding costs will likely be zero, @Account Closed, since it's doubtful you'll find a hard money lender to fund this deal under the scenario you presented.

Because of the overly strict regulations that govern home loans, such as Dodd-Frank and the SAFE Act, most hard money lenders will not loan on owner occupied properties. I won't say they don't exist, because I know several that are appropriately licensed and can make these loans, but they tend to specialize in lending to well-qualified borrowers that the banks won't touch. These include the self-employed and commissioned sales people with excellent income, credit, and an adequate down payment. You don't seem to fall into these categories and most hard money lenders will expect you to put down around 20%. In your case, a HUD 203k loan might be a better option since it includes rehab costs.

If these don't work, because this otherwise sounds like a good deal, you might consider partnering with another investor to flip this property to build your war chest. Or, convince the seller to allow you to go FHA.