100% purchase/rehab loan success

[Aaron Dearth]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $170,000
Cash invested: $42,000

Our Second Deal, Single family property with unfinished basement that needed a new roof. We purchased the property for $170,000. ARV is $272,000! However, our local bank is not offering cash out refinancing. Our bank offers a 100% rehab loan that was rolled into the purchase. So the only cash we had to put in the deal is 15% down payment of $170,000 plus $60,000 rehab costs plus the closing costs totaling $42,000 left of our own cash in the deal.

What made you interested in investing in this type of deal?

David Greenes BRRRR book

How did you find this deal and how did you negotiate it?

Found the deal on the MLS and we negotiated using the estimated rehab costs like a new roof to get the seller to decrease the price of property for us.

How did you finance this deal?

We financed with a local bank that offered a 100% purchase/rehab loan with the intent of cash out refinancing

How did you add value to the deal?

Added a new roof and finished the large basement increasing the livable square footage of the property

What was the outcome?

Basically we added so much equity with the banks 100% purchase/rehab loan that the local bank's investors deemed a cash out refinance too much risk due to the fact that after the cash out refinance my business partner and I would have had little to none of our own cash left in the deal, which would have been awesome for us!

Lessons learned? Challenges?

We added too much equity! lol Currently still trying to overcome this barrier, but it's not stopping us from continuing to acquire more investment real estate.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

First Community Bank of Eastern Tennessee