Funding for renovation costs only?

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You wont get a bank to touch it, but can usually get up to 65% ARV pretty easily with hard money. I borrow 70% from private lenders pretty regularly. You're over that threshold, though. I'd caution against doing a $90k rehab on your first one unless you are a contractor by trade. That's a LOT of work for a 78% deal. You'd be better off buying a lot and doing new construction for that spread. Check your numbers, too. That's probably a money loser by the time you get done paying money costs and realtor fees if you dont have a pretty good padding for overages in your $90k and this is your first one. You might need to do some more reading on what a good deal looks like. This business is pretty far from ARV less repairs and purchase = profit. My numbers would look like this: Purchase: $20k Rehab: $90k Money costs: $9,900 (2pts & 12% for 9 months on rehab dollars) Realtor fees: $8,500 Projected profit: $11,600k That's assuming you've got 15% for misc in your rehab number, because you WILL find things not on your estimate. You are at roughly $11,600k profit, which isn't much on a $90k renovation. I plan for a minimum of 30% profit, knowing 15% is going to money costs and realtors and closing costs and whatever else, so I make about 15% on a house give or take how well I bought it. When you start at 22%, it doesn't leave much room for error (or profit). $90k sounds super high for a $140k house, though. What all are you doing for those kind of dollars?

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@Andy Collins , come on up! haha And @Cuong Le - WOW! A new, standard-sized roof (scrape off old and re-shingle w/architectural shingles) is 9k-10k all day long, though an overlay can be done for half that (I know, beware). If anyone in CT has better numbers, please tell me and then hook me up. :-) I have not delved into the world of foundation repair, which scares me, frankly. Nor have I done an AC system (I typically go for entry-level houses and they don't normally have central AC, which is a little more of a luxury in CT). Though for heating, a new furnace is 5k. Anyway, we count by 5s and 10s a lot here. Which, to get back to the original question, is another reason to be super cautious. Things can escalate in a hurry.

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Wow, reading this thread makes me happy I'm in Dallas,,the numbers Cuong Le gave are just about exactly what I would have said,,,,my last total AC/Heat job was about $3700 (including a little bit of duck rework),,,,,maybe I'll fill a truck up with stuff and drive to CT

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@Karin DiMauro - That's $10k to $15k total for all three for an average 1500 to 2000 SF home. Foundation depending on severity can be around $5k, new 20 yr simple roof for about $5k and a new AC unit with brand new duct work from $4-5k. These were all individual trades and not done with a GC. If it was done by GC, it maybe a bit more.

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Hi @Cuong Le - were you talking 10-15k apiece for roof, foundation and AC? If you meant that you can do all three combined for that in Texas, I will fly your contractor to CT for my next project and still save a ton of dough! ;-) 90k is quite possible on a total gut in CT. I went to my REIA's rehab subgroup meeting in late spring and walked through a 100k rehab that had been a gut and included some maneuvering of the floor plan, taking out walls, moving stairs, finishing the basement, electrical, removing a concrete patio in the backyard, staging, you name it. And this was a similarly-sized ranch of about 1200sf, done by experienced rehabbers, not someone paying full retail for work. Still, they had about 14 offers and made a nice profit in the end - so it can work, but as everyone here mentioned, you better know your numbers. And they did.

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@Kevin Gerace - The bank is not going to lend on $20k. Most have their minimums around $40k-50k but every lender is a bit different. As @Karin DiMauro showed the math in her post, this is not a deal. Even if they gave it to you for free, you'd be losing money. ($140k x .7 = $98k - $90k rehab - $10k closing cost for hard money and then refi = no bueno) I can't believe rehab cost would be that high...$90k rehab? Here in Texas, the major components (foundation, roof and AC system) would run you between $10k-$15k. The rest like flooring, paint, appliances, etc won't eat the rest of what will be left over of the $90k. I guess Connecticut has really high costs. I'd pass on this one and find another one a bit more manageable for your first few deals. Good luck!

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Thank you everyone for your help. I really need to be on here more and asking more questions. This has been really helpful.

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@Kevin Gerace I would have to agree with the previous comments. Your margins are razor thin based on your numbers and if things don't go as planned you could be taking a loss on the deal. You have to be really confident of your ARV as well. There is a great book put together by J Scott called The Book on Flipping Houses (http://get.biggerpockets.com/flippingbook/) that I highly recommend. It provides a lot of useful information on flipping as well as how to accurately estimate your rehab costs. Don't become to anxious about finding that first deal. Patience and proper due diligence is the key to a profitable deal.

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@Darrell Shepherd I'd venture to guess you could take Georgia numbers and almost double them to get CT rates. Welcome to one of the most expensive states in the country, my friend. :) Anytime I see rehab numbers quoted on this site, I automatically guesstimate 1.5 times as much as a starting point for my area. I'm still a bit of a newbie, but that's worked out fairly accurate so far. Still, 90k is a massive undertaking, even in high-priced Connecticut. And using the 70% guideline, @Kevin Gerace , I get a purchase price of 8k (140k x .70, minus 90k). I'd personally be afraid of this one. Even if your construction numbers are right on, there are so many soft costs that could eat you alive - especially if you use a hard-money lender.

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I could tear 1100 sq/ft down and rebuild it for less than $90k. I dont know CT rates, but I'd say $60k max for a gut rehab on that small of a house if you GC it yourself, and that's doing EVERYHTING. I dont know that I could spend that on 1100 sq.ft. unless it had foundation issues. That's probably a decent deal if you can get your renovation costs down by $20k or so. I'd buy it blind with a $70k budget on that size of house around here if the area was nice.