New investor lending options during COVID

[Aaron Singer]

I’m a new investor from AZ seeking deals in the Indianapolis area. In speaking with an Indy private bank, they are cutting off “fix/flip” loans for any investors with less than 3 deals. Wondering if others are hearing the same? Any  private lenders (banks) out there willing to lend to first time investors to cover rehab costs? I’m not opposed to private money, but would like to explore the banking option first, if possible. 

[Perry Farella]

There is still the conventional Investor rehab loans for either fix/flip or buy/hold. They are called HomeStyle and Choice Renovation. Here is an example of how they work but note they are for Individuals only, NOT any LLCs or businesses. A middle credit score of at least 620 is required.
Example: Buy at 100k + 100K to rehab + required 10% Emergency Reserve added to the loan of 10k in this case = 210k total transaction to the lender. Minimum 15% down required off the total 210k total which is 31,500 leaving a 30 year term regular mortgage of 178,500. BUT the loan requires a Contractor running the job. It is NOT a loan where you get the cash to run the project or even do the work yourself. it is designed for the novice rehabber with Lender oversight. The loan is based on the After Renovated Value as projected by a local licensed Appraiser.
While lots of rules you do not get approved unless the numbers are proven by an Appraisal to work prior to loan approval. So you are largely protected from making a mistake. Yet if the project runs over time that is a consideration since payments begin about 30 days after closing. The monthly payments are both Principal & Interest and so the loan can be kept for all 30 years if you wish. Rates are based on credit scores of the borrower(s) and far less than most hard Mooney Lenders. Happy to answer questions any time and check my blog for more examples.