Residential Rehab Loans
So, you’ve decided you want to rehab and flip a property. Well done!
We’re very happy to help you every step of the way to ensure your investment success. One of the ways we ensure success is by having selective criteria with each of our residential loans. We want you to make a great profit of your deal, so to do that we have a list of standards regarding which types of homes we lend on to eliminate risk factors and decrease the chance of you being stuck rehabbing a terrible property that won’t turn a profit.
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10 Criteria Points for Residential Rehab Loans:
1. The property must be a single family residence.
We lend only on single family residences, rather than funding duplex, 3plex or 4plexes, for a variety of reasons:
- Plexes add A LOT more expense to their value due to having multiple units.
- Plexes usually have 2-4 kitchens and 2-4 baths, making them very expensive remodels.
- Plexes typically don’t get sold to home owners, but to investors, making them more difficult to sell.
- With a plex, it’s difficult to compare and calculate its property value, since there wouldn’t be many other plexes around to compare.
- Plexes generally aren’t the best way to make profit. As a result, flex funding requests have been quite rare over the years.
2. The property must be no less than 900 square feet.
We figure the resale profit for you will be MUCH greater if you’re not trying to rehab and flip a closet.
3. The value of the property must be less than 250k.
There are hard money lenders which specialize in funding high-end properties, but we prefer to stay in a more profitable margin. Keeping the funding cap at $250k widens the pool of potential buyers for your property and keeps you from drowning in debt if the house doesn’t sell.
4. The property must not be owner-occupied.
Like many other hard money lenders, we don’t lend on owner-occupied properties (or properties which will be occupied by yourself). This is due to the extra rules and regulations enforced by the Dodd-Frank Wall Street Reform and Consumer Protection Act. Lending on owner-occupied properties increases risk, which we want to steer clear of and protect you from.
5. The property must not be manufactured, mobile or recreational properties.
•A manufactured home consists of a type of prefabricated housing (usually assembled in factories) transported to sites of use.
• Mobile homes are manufactured homes which were built prior to 1976 when the HUD code governing building standards for factory-built homes was instituted.
• Recreational properties include agricultural property for farming, lake or river front property with a cabin, ranch land used to raise animals, or country living estates for weekend getaways.
6. The property must be not require more than $75k in repairs.
This criteria goes hand-in-hand with the property value criteria: if you have to sink a large chunk of the loan into repairs, the deal isn’t as good as you thought. We want to keep you invested in good deals, rather than waste endless amounts of time and money pursuing deals which won’t give you at least a $10k return on your investment.
7. The property must not have meth, mold or fire damage.
A property with a history methamphetamine use/manufacture is nearly impossible to rehab. When meth is cooked or consumed in a home, dangerous chemicals are released into the air and saturate walls, ceilings, floors and carpets. Though this contamination can’t be detected by the human eye, exposure to meth byproducts can result in serious injuries to your nervous system. Houses with mold or fire damage are also a major pain to rehab because they require gutting and rebuilding. They typically end up becoming money pits, leaving you with little-to-no return on your investment.
8. The property must not have significant foundation or truss problems.
One of the scariest repairs for any house is a foundation problem. Foundation problems can destroy a house quicker than anything and they end up costing a great deal of money to fix, thereby decreasing your investment return. Just as important as the security of what’s beneath you is the security of what’s above you. Truss problems are not only dangerous, but also end up costing a great deal to fix. Since our goal is to give you as great a return as possible on your investment, we tend to stay away from lending on properties with significant foundation or truss problems.
9. The property must not be located in a rural area.b>
Hard money lenders typically stay away from lending in rural areas because they attract a very limited pool of buyers. There are also no significant properties around to compare, therefore it’s difficult to ascertain the true value of rural properties.
10. The property must not have significant structural changes or add-ons.
Here, we’re talking MAJOR structural deviations from the original blueprints of the home, such as adding walls or levels to the home. These endeavors also end up being money pits, which drastically reduce the return on your investment. We prefer to keep the rehab on the simple side to eliminate potential problems and to make sure you’re getting a larger ROI when all is said and done.
Lee Staehly – Net Profit $40,000
Jesse Jaynes – Net Profit $50,000
Peter Kuld – Net Profit $14,000
Now that you’re educated on the types of residential rehabs for which we can provide funding, there are many exciting options to take advantage of when it comes to your funding and finding the perfect residential rehab deal:
REI Starter System: Helps you jump-start into investing with essential tools and software you’ll need to find deals and get funded.
Wholesale Professional: Shows all of the different ways to find properties, validate deals and develop a buyers list.
Guaranteed 90-Day Finding System: Helps you find profitable properties in 90 days or less while learning valuable finding strategies.
REI Professional System: Gives you step-by-step instructions, tools and coaching sessions for maximizing profit in real estate investments.
Advanced Deal Analysis: An all-inclusive profit and risk analysis which helps you save time and money in finding the best deals.
Evaluation Credit: Consists of at least two evaluations by third-party independent evaluators to assess the value of the property and provide vital information about the investment and profit potential.
Guaranteed Finding Starter System: A proven, step-by-step, comprehensive system which teaches how to find and value properties.
Partner-with-a-Pro Starter System: Gives you the opportunity to partner with one of our professionals to flip houses with guaranteed no cash to close, and earn a steady profit.
Proof of Funds: Helps you get under contract fast with instant credibility.
Critical Contracts Portfolio: An all-inclusive compilation of various contracts we’ve acquired over the years to help protect you and your investments.
A special collection of all of our checklists reserved only for a select few to guide them towards investment success.