Hi All,
I'd be interested to know if anyone is having challenges with obtaining USA finance at the moment. Especially on purchase prices under $70kUSD.I am currently doing rehabs in Texas.Because the banks will only let you borrow on the purchase price value, it dosnt make any sense to pay all the fees associated in setting up the loan, when in 8 weeks time for example, you are going to want to re finance your property at its improved value! I have found a hard money lender who I am going to trial and see how it works. They assess the works that will be taking place and get the property valued at what the improved value will be. They let you borrow 70% of the improved value. It is a perfect option for rehabbing as it allows you to put minimum money down and then refinance with a traditional lender after completion.To give you an idea on how my property will look: (Hopefully)
PURCHASE PRICE: $58KUSD
RENOVATION COSTS: $18KUSD
TOTAL PURCHASE COSTS: $76KUSD
Appraisal value after completion: $95kUSD, Therefore I can borrow 70% of $95k.
Borrowed amount:$66500.00
Balance to complete works is $9500USD
Loan set up fee is 3% of borrowed funds: $1995USD
Appraisal/Valuation fee $350USD
Total: $11,845.00USD cash outlayed
Cash is definately the best option in the attempt to minimise fees etc, but this may prove to be a good option for those like myself who dont have all the cash funds but enough to cover a deposit etc.I will keep you posted on this forum as to how it works out.
I am also working with a series of Vendors in both NY & TX who own numerous properties and who are interest in selling their properties on vendor terms with a 20% deposit and the balance of the loan repaid over say 15 years at say 6.75%.It is in the negotiation stages, but things are looking promising and there may be some good options avaliable on this in the new year.
If anyone else has any insights into the USA finance options, feel free to share them.
Happy investing!
Chad
I'd be interested to know if anyone is having challenges with obtaining USA finance at the moment. Especially on purchase prices under $70kUSD.I am currently doing rehabs in Texas.Because the banks will only let you borrow on the purchase price value, it dosnt make any sense to pay all the fees associated in setting up the loan, when in 8 weeks time for example, you are going to want to re finance your property at its improved value! I have found a hard money lender who I am going to trial and see how it works. They assess the works that will be taking place and get the property valued at what the improved value will be. They let you borrow 70% of the improved value. It is a perfect option for rehabbing as it allows you to put minimum money down and then refinance with a traditional lender after completion.To give you an idea on how my property will look: (Hopefully)
PURCHASE PRICE: $58KUSD
RENOVATION COSTS: $18KUSD
TOTAL PURCHASE COSTS: $76KUSD
Appraisal value after completion: $95kUSD, Therefore I can borrow 70% of $95k.
Borrowed amount:$66500.00
Balance to complete works is $9500USD
Loan set up fee is 3% of borrowed funds: $1995USD
Appraisal/Valuation fee $350USD
Total: $11,845.00USD cash outlayed
Cash is definately the best option in the attempt to minimise fees etc, but this may prove to be a good option for those like myself who dont have all the cash funds but enough to cover a deposit etc.I will keep you posted on this forum as to how it works out.
I am also working with a series of Vendors in both NY & TX who own numerous properties and who are interest in selling their properties on vendor terms with a 20% deposit and the balance of the loan repaid over say 15 years at say 6.75%.It is in the negotiation stages, but things are looking promising and there may be some good options avaliable on this in the new year.
If anyone else has any insights into the USA finance options, feel free to share them.
Happy investing!
Chad