Fix and Flip Loans

Some of the financing we do is a little outside the box, and fix-and-flip loans are a great example. These loans can be used when you plan to renovate and sell a property, renovate and refinance it as a rental, or possibly renovate it and move in later.
The loan is largely based on the property's after-repair value, or ARV, which is the estimated value once the improvements are completed.

Depending on the borrower and the project, we may be able to finance approximately:

• 75% of the ARV for a newer investor
• Up to 80% of the ARV for an experienced investor

Experienced investors may qualify with as little as 5% down, while newer investors may need closer to 10% down. We will also need a contractor and a detailed renovation budget. In many cases, the lender can finance up to 100% of the approved renovation costs, with funds released as the work is completed.
Here is a simple example:

• Purchase price: $700,000
• Renovation budget: $150,000
• After-repair value: $1,000,000

At 80% of the ARV, the maximum loan would be approximately $800,000. Since the purchase and renovation costs total $850,000, the borrower would need to bring in at least $50,000, plus closing costs and any required reserves. You purchase the property, complete the repairs, pay the interest while the work is being done, and then either sell or refinance the home. 

The part many investors overlook is the additional cost of the project. Interest, property taxes, insurance, real estate commissions, closing costs, utilities, and repair overages all reduce the final profit.
For example, if the property sells for $1 million and the total purchase, renovation, carrying, and selling costs equal $965,000, the estimated profit would be approximately $35,000. 

That may not sound like a huge profit, but if the investor only had approximately $100,000 out of pocket, that would represent a 35% return in about six months. Of course, every deal is different. The key is finding the right property, using realistic repair numbers, accounting for all expenses, and having a clear plan to sell or refinance once the project is complete. 

Please let me know if you have any questions! 

Interest Rates

Up a little today after a two-day winning streak. Rates started off rough today on oil news and improved as other numbers came out. I don’t see evidence that we have a great economy or that we should be at these levels, and I am biased.   

Loan Programs Snapshot

• Government loans (FHA/VA/USDA): in the 5s –
• Conventional (≤ $832,750): low 6s
• High-balance: mid to high 6s
• Jumbo: Mid 6s
• Bridge Loans 7.75-7.99

Additional options:

• Bank statement loans (10% down+)
• P&L loans (20% down, no bank statements)
• 0% down options (620+ score)
• DSCR loans (15% down)
• Buydowns Available (3/2/1, 2/1, 1/0)
• Private Money loans – Hard Money  
• Construction Loans
• 203K loans
• Commercial Loans
• Fix and Flip Loans  

Rates subject to change without notice.

Condo Update
Good news:

• Heather Ridge – Off the naughty list and back in business! New Insurance policy and a new life!    

Bad news:

• Del Prado  – Newhall – Critical Repairs – Deferred maintenance
• Palisades -  25730 Armstrong Stevenson Ranch CA 91381 – Critical repairs   – Deferred maintenance  – reserves  –  Insurance!  Yes, they hit just about every bad thing you can!  LOL! 
• The Legends at Cascades  – 16702 Niklaus Drive Sylmar – Insurance deductible too high!  
• Tres Robles 3  – Critical repairs – deferred maintenance  
• Vera Townhomes – 43334 32nd Street West Lancaster – Reserves are too low!  

We love your Non-Warrantable Condo loans!! 

Need help checking a condo? Call me, and we can look it up in real time.
Also:
Full California "naughty list" available here:
https://mikemeena.com/non-warrantable-condos/ 

Let's Connect 

If you or your clients, friends, or family need guidance, I'm here.

📞 661-291-2222 (Direct)

📞 661-714-6258 (Cell)

📞 661-260-2970 ext. 2222 (Office)

📧 Mike@AugustaFinancial.com

Sincerely,