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Updated almost 7 years ago on . Most recent reply

User Stats

10
Posts
3
Votes
Sean Fuller
  • Lender
  • Washington, DC
3
Votes |
10
Posts

How to fund the Rehab of my deal

Sean Fuller
  • Lender
  • Washington, DC
Posted

I'm a new investor and I currently have an assignment deal in Baltimore Maryland, below are the numbers for the deal

ARV: 225,000

Rehab: 80,000

Purchase: 75,000

I am currently working with a mix of local and national lenders, but with each interaction, I feel like I'm missing something. My goal is to pay $25,000 at closing ($15,000 for purchase and $10,000 for fees) or less and get a check at closing to start the renovations, but some of the lenders I speak to seems to reimburse me for the expense, which seems to me I would need another $20,000 to get started with the renovations.

Since I don't have access to that level of cash I wanted to get feedback from the community about what I may be missing. Do I need to front the renovation cost of things like permits, dumpster, materials, etc. Or can I get the funds at closing to accomplish all this, Or am I missing something about how contractors bill lenders and this is not an issue?

Can someone help me understand this process better 

Thanks

Sean 

Most Popular Reply

User Stats

90
Posts
49
Votes
Beth H.
  • Real Estate Investor
  • Catonsville, MD
49
Votes |
90
Posts
Beth H.
  • Real Estate Investor
  • Catonsville, MD
Replied

We are investors as well as hard money lenders for last 16 plus years in the Maryland market.  Those terms are typical. You will need about 10 percent for down payment plus closing costs to get to settlement.  Then you should have access to cash to start the work until you are reimbursed by lender through a draw schedule.  No hard money lender I know will advance construction money to you.  It is held in escrow until work is completed in stages.  I hope this helps. 

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