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Re: how do I get money to fix up the property? (1 viewing) (1) Guests
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TOPIC: Re: how do I get money to fix up the property?
#2148
Larry ()
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Re: how do I get money to fix up the property? 5 Years ago Karma: 0  
If the house you're buying is at a substantial discount you may be able to have an inspector/contractor go in and give you a detailed list of repairs needed. Then give the list to an appraiser and ask for an appraisal estimate as if the repairs have been done, this gives you an "After Rehab Value" (ARV). You may be able to get a loan _base_d on the ARV to cover the cost of the property and repairs, plus gives you a good idea of the equity you will have in the property when the work is done. Look for at LEAST 20% equity (imo) to secure a decent return. If anyone sees a flaw in this, please respond, I don't want to be giving bad advice!! If the ARV is high enough, an 85% loan may give you money to cover 3-4 months payments (or more) and other unexpected costs. Hope this helps out, God bless///Colonel
 
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#2149
mar ()
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Re: how do I get money to fix up the property? 5 Years ago Karma: 0  
Thank You  colonel 4 the advice.
 
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#2150
piaverdera ()
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Re: how do I get money to fix up the property? 4 Years, 11 Months ago Karma: 0  
[quote author=Parascheva1014 _link_=topic=573.msg2627#msg2627 date=1166134386]
Its all in how you set up the deal to begin with. Here's how one of my deals went:

1. Get a Home Equity Line of Credit on another property for $65k
2. Buy the rehab property for $47K using HELOC from other property
3. Pay a guy $7K to do the work if you buy all the materials
4. Put all materials (about $11k) on an American Express Card (no limit to AMEX) and get airline miles to fly grandma in for Christmas
5. Close on property and start work.
6. Two weeks after closing I called Wachovia bank and financed the property for $96k (they electronically valued it at $135k so they never actually saw the property while it was being rehabed. Always just go with the electronic appraisal because an actual would probably be less in a rehab)
7. Two weeks later I finished the rehab work and put a tenant in the place at $900 per month

At the end of the day I have a house with a tenant paying $900/month, $31k in untaxable cash and a paid off line of credit to do the whole thing again.

Thats how you do it.


that's amazing, man...
 
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#2151
Marc ()
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Re: how do I get money to fix up the property? 4 Years, 11 Months ago Karma: 0  
create a budget for the project you need.  Work at it at your own pace.  Use any income leftover after the debt service has been paid if it's a rental.
 
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