As most investors and owner occupant buyers are scrutinizing the real estate opportunities that require mild to extensive re-habs; it has become more of a quandary as to the financing limitations for Investors versus Owner Occupants.  The Investors with deep pockets are still digging deep in many cases.  Here in the Twin Cities metro, there are a few better 'Hard Money' lending options that might prove to be a better cash flow option for both Investors and Owner Occupants.  This quandary between availability of finance products and actual financing need is improving!  At a time when the number of available properties are in need of remodel, traditional lenders have drastically impacted that attainability with their financing limitations.

Locally, we have found a few Investor sources to address these particular shortfalls, particularly for INVESTOR buyers without the deep pockets and the owner occupant buyers who do not want to jump through the lengthy and time consuming purchase re-hab guidelines and/or limitations.  Now remember, I'm referring to private, hard money investment options.  If you're already working with a bank who will provide these types of private investment financing options, you probably have a more cost efficient option with that bank.

Here are the basics and a sample Purchase/Rehab scenario with the Private Financing Options:

The Private Lenders will finance 100% of purchase price PLUS the rehab costs PLUS the necessary closing costs.  On top of that they will potentially finance the monthly payments during the rehab time frame if necessary.  As long as the loan amount is NOT MORE than 70% of the after-improved value.  Limitations include:

*Single family and multi-family up to 4 units only.  Retail or Commercial properties will NOT be considered at this time.

*Client approval is based on FNMA guidelines for ability to refinance property at the point of rehab completion.

*Investors who currently have more than 4 properties with permanent financing are also EXCLUDED.

*All properties must be in a break even position in terms of cash flow as a rental option using market rental comparables for the area.

Remember, I said this is private money.  The cost is high.  There are 2 pricing options:  8 points and 10% interest or 6 points and 15% interest.  Much better than the 21% and 22% options we've heard about around the cities for the past year.

Now the above might sound like a price not worth paying...but if looking at a sample PURCHASE/REHAB scenario:

$120,000 purchase

$40,000 rehab cost

After improved value of $250,000

Investor Cost:      6 points:               $9,600

                Interest:                          $8,250 (assuming 4 month to rehab and sell)      

                Other Closing Costs:          $2,500  (estimate)

                Resale Costs:                     $15,000 (agent resale commission at 6%)

                Resale Closing Costs:          $2,500   (estimate)

TOTAL Expenses:                                 $37,850

Net Income for Investor:                              $52,150 

 Clearly, the above numbers are potential and hypothetical from the position that the loan amount is NOT MORE than 70% of the after-improved value and the purchase was supervised from a position of proper acquisition and the ability to re-sell the home with-in the Investors time frame.

ALSO, CONSIDER OUR EXCLUSIVE BUYER SCOUTING REPORT/HOME BUYER ASSISTANCE PROGRAM FOR FUTURE ACQUISITIONS.  IT'S HASSLE FREE AND EXCLUSIVE TO OUR NEXUS.  SIMPLY CLICK HERE TO LEARN MORE...

 Should you want to discuss and/or consider your best purchase re-hab options, please do not hesitate to call me at your earliest convenience.  Frank D'Angelo, Broker EXIT REALTY NEXUS of Minneapolis MN.  (763) 548.1444  You have TWO OPTIONS:  1.  Get Connected with someone who will make you the most informed consumer... or 2. NOT

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