Need 100% LTV financing for a residential property

[Johanna Anderson]

I have started a real estate investment LLC, and I will soon be doing fix and flips. However, my immediate need is personal and urgent.

I want to buy a house in Silver Spring, MD (a suburb of Washington, DC) for $640,000.00. This house needs no rehab. My goal is to sell the house immediately to another local investor, then rent it back from him or her with a 5 year option to buy.

I will fix my purchase price at $700,000.00 when I buy the house back in 5 years. This gives the investor a guaranteed profit of $60,000.00, which would be his or her incentive to buy the property from me.

I have $5,000.00 liquidity and halfway decent credit. I am employed part time. Does anyone know of a hard money lender who will give me a loan to 100% LTV for 6 months?

Thanks in advance for the feedback. Johanna 

[Marvin McTaw]

@Johanna Anderson - I was watching a webinar the other day and the speaker said something that stuck with me: not every deal is 100% finance-able but every deal can be 100% financed. What he meant by that is you can't always get 100% financing from one source for your deals. Most hard money lenders will only lend 65-70% of the ARV and some will do gap financing for another portion of it. You can however combine a hard money lender, or traditional lender with a private lender to cover 100% of all the costs/expenses needed to do your deal. If you think about it, many people do this without even thinking about it. They'll get an 80% to 95% traditional mortgage or FHA Loan and then "borrow" the other 5 to 20% from family members or friends thereby getting 100% financing.

All that being said, your idea to buy the house, sell it to another investor and then rent from him just doesn't seem to pass the smell test to me. I don't really see how you make money on the deal and with a five year horizon, who's to say the person you're going to buy from will even honor the agreement or that you will even want to buy the house for the option price at that point in time. 

My advice: work on building up some liquidity (cash savings) and improve your credit to a pristine level. You can build cash by doing deals with homes you won't be occupying or do rehabs or get another job. The possibilities are endless. On the credit side, get a free credit report and credit score and do what's suggested to improve your score further. 

Good luck!