I have wanted to write about this subject for awhile. Now before I go any further, I should point out that the Rehab I'm talking about has nothing to do with any addiction. (I know, you are so disappointed and the title was such a tease:-). This has everything to do with newbie and/or seasoned Real Estate Investors who seek to buy properties and then Rehab them for eventual resale.
Here's a concrete example of a typical and very doable Rehab Transaction...
Customer is buying a distressed property for $45,000. He believes that he can fix it up to salable condition for $46,000. When the property is done, it should be able to sell for about for $180,000. (Based off of an After Repair Value Appraisal)
In this case... we are loaning the borrower $96,400 which is 54% of 180,000! (I can lend up to 80% of the ARV value if that is needed)
In other words...
We are giving him:
| the 45,000 to buy the property |
| the 46,000 to fix it up |
| plus any money for closing costs... (no cash in your pocket as I also mention below) |
He doesn't need any of his own money!!!
A few notes in regards to these products:
- After the property is brought up to par, you can immediately sell or refinance to get cash-out. If you chose to do a cash-out refinance, make sure you contact a Mortgage Company whose Investors don't have seasoning requirements (having to hold onto a property for 6 or 12 months after buying it before you can take cash-out).
- Currently, with these Rehab Loans, you can't put cash in pocket on this particular product unless you refinance after the fact.
- Minimum Credit Scores are generally required to be 660 and you must be able to fully document your income to qualify for the loan.
The thing that isn't often mentioned with Rehab Loans is the real value. Sure, you can make a pretty good living doing these deals as a Real Estate Investor, yet there is another very tangible benefit deeper than just financial rewards. Revitalizing properties help the growth and health of the community. It's a Win-Win proposition and that's what any successful Real Estate Transaction is all about.
For more information on Rehab Loans in Pennsylvania, feel free to email me or give me a call.
Jason Sardi
First Choice Equity Group Inc.
Mortgage Consultant
610-439-2166 ext. 229
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