I just wanted to write about some loans that I specialize in that can be a great asset to both Real Estate agents and investors. They are known as Rehab Loans, and they provide financing not only for the purchase of the home, but also for the repairs that may be needed.
Here is how they work. First the property must have some good equity in it. The bank will lend up to 80% of the after repaired value (ARV) on the home. So an appraisal is done based on the home being updated and in good condition. As an example, if the purchase price is $60,000, and $20,000 were needed for repairs, and home is going to be worth $100,000 after the repairs are completed, then the bank would lend up to $80,000. This would give an investor $20,000 to complete the repairs.
The qualification criteria is a little more strict than standard loans, because of the fact that the bank is lending more than the current value of the home. The investor must have excellent credit and must also have a good amount of liquid assets. The investor must also be a local resident of Nashville or the state of Tennessee. Banks do not want an investor from out of state trying to coordinate the rehab work. It also helps if the investor can show a history of doing rehab work on homes.
Once the rehab work is completed, the home can be sold for a profit or kept as a rental property. Please let me know if you have any questions about this program!
Thanks,
Chris Haynes
615-945-3994
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