A Bay Area real estate investor acquired this Oakland Hills fixer upper using high-leverage, low upfront cost hard money fix and flip financing from Peer-To-Peer Trust Deeds of Walnut Creek, California.
There were several factors that led to the borrower's 85% Loan-To-Value (LTV) loan approval:
- Previous house flipping experience (3+ successful flips)
- Clean background check
- Liquidity
- Purchase price versus AS-IS value of the property
- Renovation Budget / Scope of Work
- After Repaired Value (ARV) / Resale Value
Despite the personal underwriting requirements (experience, background, and liquidity), this loan was really an equity-based loan. In this scenario, the lender who made the new first trust deed for $518,500, believed that the AS-IS value was much higher than the $610,000 purchase price. And that's how we arrived at an 85% LTV loan.
Fix and Flip Financing Terms:
- $518,500 Loan Amount (85% LTV)
- 12.00% Interest-Only
- $5,185/mo Payment
- 12 Month Term
- No Prepayment Penalty
By acquiring the property below market value, the borrower was able to use maximum leverage to close the sale. And with low upfront fees of 1% + $995, the buyer was able to limit their initial cash outlay and use cash on hand for permits and renovations.
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