All Forum Posts by: Randy Sommers

have you considered using it for short term vacation rental? If you have a good area, might be something to look into.  My daughter handles that kind of transactions and is currently doing two rooms and an apartment in Idaho Falls.

If you run into issues with traditional banks on the refi, you can still get lower interest rates for long term rental doing a refi with hard money.  A lot of the hard money interest rates are 10% to 18% for fix and flip, but if you are only in for 2-3 months, that is not so bad.  Rates I have seen for hard money refi are around 6% and some allow only 3 months seasoning and up to a 30 year loan.

I have purchased several out of state properties that I have never personally seen. Of extreme importance is that I always had a through property inspection done so I knew what I was getting and what needed to be done.  So although I never saw them in person I got some in-depth photos.

Are you financing with a conventional lender or looking at a hard money loan?   You can get better interest rates with a conventional lender generally, but some hard money loans allow for you to put down only 20%

Not sure it would be okay to post the name, but if you send me an email, I can give you more information.

There are lenders who will lend for an auction, so that would be one option. One I am familiar with funds 50% of the approved--by them of course--purchase price. Value must be at least $100,000 ARV and it is possible to roll the financing into another program once the house can actually be inspected. They have a buy renovate and hold program that pays 85% of project costs. If you have existing properties that are free and clear, there is the option of financing them to have the funds to buy at auction.

Most hard money lenders will do a quick review to see if a deal really is a deal and for the most part you need to be buying 60-75% of the ARV so If it is actually worth $125,000, you should be getting it for $81,250.00 less repairs, so if $5000 in repairs $76250.00. The reason for this are your actual costs as the property will end up selling twice, once when you buy it to fix it up and then again when you put it back on the market after fixing it up. As such you will have twice the closing costs. Most hard money loans are around 12% or more, plus the point costs so that subtracts from your profit as well, on the plus side the loan payments are interest only and with a Wholetail you should only have the loan for a month or two.

As a broker for private money lenders, I can tell you their are few hard money lenders who will loan on owner occupied, but their are a few. The second issue is that a lender for cash out refi is going to look at the ACV not the ARV has the house is not as yet fixed up, which will not give you the money you need to pay off the hard money loan. The likely interest rate is 11% on up to 15% and while that is interest only for a fix and flip, these need to be paid off sooner rather than later.