All Forum Posts by: Gilberto Ramirez III

Tagging my favorite LO @Wyatt Wolff good luck, Gilberto!

@Gilberto Ramirez III a fix and flip loan (12 month interest only loan) to purchase and rehab the property. If your exit strategy is to rent the units then you will want a DSCR loan (30 year mortgage for rental property) to refinance the fix and flip loan. At OfferMarket, we call this a Fix and Rent loan which is a bundle to provide savings.

Hi @Gilberto Ramirez III what is rehab and ARV? Do you have a contractor on the project? It is definitely possible to get a fix & flip/hold purchase loan on something like this but on a conversion such as this one you will definitely need a contractor or some subs for the experience factor and all-star credit so lender can feel confident that the project can be completed. Feel free to message me if you have any additional questions. Looks like a fun project!

Great question! In order for us to accurately answer/direct you to a loan product will require more information. 

What are your intentions with the property (will you occupy it from the start? Do you plan on doing these improvements before anyone moves in? Timeline?)? What is your budget? How much do you plan on putting down?

There are hundreds of ways to structure a loan, and we need a few more inputs to be able to guide you in the right direction. 

Great question! In order for us to accurately answer/direct you to a loan product will require more information. 

What are your intentions with the property (will you occupy it from the start? Do you plan on doing these improvements before anyone moves in? Timeline?)? What is your budget? How much do you plan on putting down?

There are hundreds of ways to structure a loan, and we need a few more inputs to be able to guide you in the right direction. 

So, if you have no experience this will be a very hard deal 1 to finance.

Right away this is classified as an "Heavy" Rehab job which means rates and leverage change. Way more risk for the lender. Then there are zoning issues when going from SFH to a 2 - 4 unit. Each municipality will have their own laws and codes on the books for it. But you are talking essentially making three living quarters. Three kitchens, three baths, three electrical wirings, three HVAC installations, all the interior work, and then all the finishes. You're talking needing plans, architect drawings, engineering study, a zillion permits and inspections.

I just don't see a lender lending on this kind of deal without that person having major experience that includes some ground up or extensive rehab work.

If you wanna "break in" to the financing world, it is not impossible at all.  You will need some money and then you will need the right project.  The loan amount on the first deal really shouldn't go over 250k.  At that loan amount you will be in 30k - 40k yourself just for down payment, that means through the 6 month life cycle of the project you will be in 60k maybe after all costs.  I mean if you have 200k then you can start there, but if you have 60k and can mathematically do it I'd say it is a HUGE mistake to start there.

If you have anything under 100k to start with, then your first deal should be a nice beginner deal. Purchase price under 100k, rehab no more than 75% of the price, total project cost south of 70% of the ARV. Loan amount will be 120k - 150k. A lender will lend on that, even someone with no experience. I've gotten 0s from BP 90% before, gotten a bunch 85% as well. If you have good credit and the asset fits a nice little box for the lender then you can get in the game.

@Gilberto Ramirez III a fix and flip loan (12 month interest only loan) to purchase and rehab the property. If your exit strategy is to rent the units then you will want a DSCR loan (30 year mortgage for rental property) to refinance the fix and flip loan. At OfferMarket, we call this a Fix and Rent loan which is a bundle to provide savings.