I currently bought my first duplex I am house hacking. I have very little expenses, no debt, and make a decent income. I plan to save money to be able to do my first flip in 2023. Who are the best lenders in the Chicagoland area that work with house flippers and about how much cash will I have to save to be able to qualify for a loan on a fixer upper?
A good way to get started would be to connect with some hard money lenders. Click on the Network tab and click on Hard Money Lenders. I've heard good things about Renovo but have not used them myself.
A good way to get started would be to connect with some hard money lenders. Click on the Network tab and click on Hard Money Lenders. I've heard good things about Renovo but have not used them myself.
Who are the best lenders in the Chicagoland area that work with house flippers and about how much cash will I have to save to be able to qualify for a loan on a fixer upper?
@Paul De Luca is correct. Two reasonable ways to get started in your lender search,
1. Network --> Hard Money Lenders tab on BiggerPockets and filter by state.
2. Go to local REIA events and gather recommendations from other investors.
A reasonable rule of thumb is 1/3rd of the loan amount liquid; this doesn't necessarily mean just cash.
You'll need to bring a portion of the funds for the acquisition, the initial capital outlay on the renovation (which you'll need to float throughout the renovation process), and you'll need to be able to service the debt, i.e. make interest payments.
Figure 800 for the appraisal and then the CDA (which is the in-house audit of the appraisal)
Figure you'll make 3 - 6 debt payments while the work is being done. These days, the short term rates are higher than they were a year ago. You're gonna pay 10.5% - 12% interest only payments. So you'll pay $1,100/month for every 100k of loan value. If your loan amount is 200k (80% purchase + rehab costs) then your payments will be 2,200/month and figure 5 payments. That's another 11,000 you'll need.
Figure 1k - 1.5k for HOI
Figure 1,500 for title work
I like to tell people be ready to float 35k for every 100k of as-is value. That's why I always recommend to young investors to hold nothing. Do not lose your deal liquidity in exchange for like 200 free cashflow per month. The money means more at this point.