All Forum Posts by: Karin Crompton

Hey all - just wondering whether folks here usually have builders risk when they're rehabbing a property (in addition to regular policy)? I'm referring to rehab of a single-family house.

Thanks in advance for your insights!

Thanks again, Kevin Yeats. A LOC is a bit different from a loan, though, right? Ultimately we'd be doing the same thing, paying money back, but I thought the initial approach and application was different, no?

Absolutely, Kevin Yeats. We'd walk through the scenario very carefully. I guess I've been kind of thinking out loud here, wondering what the bank might ask for and if we'd have what they want.

So I suppose the real question is: if our rehab business is pretty new and the business itself doesn't have much to show for assets and collateral, is it possible to get a business LOC? What's a reasonable expectation, if any?

Thanks, Steve, that makes a lot of sense. I might have misspoken, as I believe she has a HELOC on her primary residence with another 60k available on that (she used part of it already) ... so I'm not sure what the exact equity is overall. A second single-family that we rent out as a vacation property is free and clear and is probably worth about 200k-plus, and has positive cash flow.

I have to gather a bunch of information, was wondering what the bank would be looking for. These responses are helpful in showing me some answers I need to find.

I'll have to double-check with my partner, but I believe she does have a free and clear single family. The tricky part is that I think it belongs to another entity, i.e. a different LLC than the one we're using. Either that or it was purchased using a Land Trust and I'm not sure how she would demonstrate ownership. It's a good question and I will find out from her tomorrow.

Hello - a friend suggested tonight that my business partner and I apply for a Business LOC with a local bank and is connecting me with a person there to speak with. I'm concerned, however, about whether we have a chance at qualifying.

My partner's LLC has been in existence a long time but she wasn't very active the past 2 years and is essentially coming out of retirement to do rehabs full-time (a r.e. broker, she used to primarily list properties while doing a few investments here and there). Thus, there isn't much to show in the way of assets for the LLC. As for me, I'm pretty new to the rehab business so I understand I still have a lot to prove.

However, my partner's personal credit is 810 and she has equity on her personal home (about 60k). And the project we have under contract - the one for which we'd use the LOC - has good numbers. We'd look for a maximum of 150k, which includes purchase price and a chunk of the rehab, and the ARV is 250k. Hell, we'd be happy with anything the bank could provide for a LOC b/c it would still be cheaper than hard money and private money!

What else do I need to know? What else will the bank want for info, and what can we do to make our case?

Thanks!

Famous Brandon Turner, where can I find the pdf? And if I print it out, will you sign it for me? ;-)

Looking forward to reading it!

Thank you all for the replies and for the detailed info on the Private Lenders association. That's great to know and good info to have.

Karen M., someone else had mentioned joint venture as a way to proceed w/multiple funding sources, so I'm checking on that (though I imagine I don't have time to pull it together for this one, I'll learn about it for the future). That's about the extent of what I know for now, other than knowing that's a scenario in which we'd proceed with caution.

Our purchase price is 115k, rehab of 60k, and ARV of 250k. Rehab numbers come from my contractor, with whom I did a couple of walk-throughs; and ARV is from myself and my partner. We each hold r.e. licenses and my partner is a long-time broker, trained in appraisal.

I'd be happy to show you around the project if the timing worked out for when you're up north!

Thanks again.

Hi Joe - agreed. We put a 3-week closing on the contract and the bank wants to close their books on it by year's end, so I don't see many options other than the hard-money guys on this one. Fortunately, we do have a few good ones in CT who are able to work quickly if they like the numbers.

Still, it's all a good kick in the pants for me to network harder and find more private money! We have a potential short sale right behind this (awaiting the bank's approval/rejection of the purchase price) and I have my eye on a property going to auction and a couple of HUD properties. It really kills me to know I can't do all of them at once at this point in my career (patience isn't exactly my strong suit).