OfflineO.K....Here is the info. I got a offer accepted on a 3bd 1.5 bath that was bank owned. Property was originally listed at 85k. I purchased the property for 57k and the comps in the area are 110-115. It only needs about 10k in rehab (new kitchen, paint and baseboards). I am using a local hard money lender and my hard money fees are around 7200.00 if it takes me 4 months to rehab. My concern is they are asking for a few items that I am not familiar with.
1. Copy of the scope of work from Contractor. Since (I have construction background I was planning on doing most of the work myself(
2. Refinance Pre-Approval letter. With the current market conditions, it is not always possible to sell the property in the short term of our loan so we require everyone to provide proof that they can refinance out of our loan.
(How can a lender pre-approve a property for re-fi before it is rehabbed?)
3.Name and Phone number of the insurance agent holding your Builder's Risk and Liability Policy (is this normal? And does anyone know how much this runs?)
I plan on holding the property and doing a lease purchase because it should cash flow about 400.00 month.
I would attach my property analysis for everyone but I am not sure how...
Any help would be appreciated.
Here would be our thoughts...we have not done a lot with Rehabs so take this with a grain of salt...
1. What is your business plan for the repairs? What is the scope of work? How much is it going to cost, timeline etc. They want to make sure that you have a plan so they are confident in their investment with you.
2. I would say any pre-approval letter should work. I would call around to several mortgage brokers and small banks (there are tons out there) and see what they require to get a pre-approval for a finance or a re-finance. There are a lot of other threads on hear about finding good banks (just type bank in the search box in the top right corner).
3. For our rehab we just got a regular homeowners insurance policy and added extra liability on it (this would be based on the type of work being done and the insurance company). As long as you have the property insured for more than they will have invested that should help.
Hope this helps...Best of luck to you and we'll look forward to your progress!
Go Cardinals...baseball season is only 4 days away!
Chip & Andrea Weule
AC Investment Group, Inc.