All Forum Posts by: Jason Richards

All great advice, Brandon.  Thanks for sharing.  

It depends on the size, style, and color of your light base.  If you can match it, a rectangular pendant may look fine.  Otherwise, drywall patch/repair is probably your best option. 

I agree with @Rhett Tullis.  While hardwood floors won't have any net effect on your appraised value, they're a must - at least in high traffic areas.  Perhaps you can reduce your budget some by using a high-end LVP or laminate in some areas (e.g. bathrooms, kitchen) or install carpet in the bedrooms upstairs (if it's a 2-story) home.  

Andres,

Conventional loan products are generally restricted to two purposes - owner occupancy or long-term rental.  I'm sure you intend to occupy the property as your primary residence during renovations.  However, you should be aware that the lender may require you to sign a document stating it is your intention at the time of purchase to occupy the property for the next year.  Based on what you've described, that statement wouldn't be true in your case.  Furthermore, even if you technically qualify for the conventional loan under the terms and guidelines, you'll generally only be able to do it once.  After that, lenders will see that you previously took out a conventional loan and paid it off by sale in a short period of time.  They'll likely deduce that it was a flip project and prevent you from borrowing for the same purposes again.  

For your situation, you may wish to consider a bank or private lender to finance your project.  By the way, I'm not trying to tell you a loan.  We're not even lending in your state.  It's simply advice for planning purposes.  

Congrats, Marc.

The Phoenix market is cooling fast. Unless the house needs very little work, you probably won't make any money unless you're buying at 70% of ARV or less.

It's uncommon to not require a down payment but those lenders do exist.  Lead Funding does not have a minimum down payment requirement.  We fund up to 100% of the purchase price.  If 3.8% is the interest rate though, this lending source may be a scam.  Cost of capital for private lenders is generally substantially higher than that rate, thus the reason we charge more on our loans.  

It depends on your definition of the 70% rule....

Originally, the rule indicated that the purchase plus rehab should be around 70% of the ARV. That version rule went out the window in most U.S. real estate markets. In my humble opinion, that only works in a buyer's market. In the markets we lend in (WA, CO, and AZ), if the purchase price is between 70-75% of ARV the property often makes a good fix/flip project. It all depends on the budget, scope of work, and terms of financing though.

I think a sale/lease back could be viable solution in this situation.  Your challenge would be the financing.  If you have the dough to pay cash for the property, problem solved!  If you're planning on financing the purchase, you should line up your lender first.  Your timeline and intended use seem sort of halfway between parameters that a private lender and more conventional lender like to see.  

@Nathan Gesner nailed it. 

I would only add one comment.  If the seller is an investor that purchased the property with the intent to renovate then rent/sell, you should be all the more alert.  Sometimes, there's a legitimate reason the seller needs to liquidate the property (e.g overextended on projects).  However, the most common reason an investor dumps a property mid-construction is discovery of a latent defect.  Ask tons of questions and get as much information in writing as you can.  Be sure to do your full due diligence.