"I have purchased a few other programs for
various investor functions and your program is
hands-down the best thing I've ever come across.
For a fraction of the money I've already spent
with other companies, I now feel I have the tools
that will put me on the investor map. Thanks again
for your continued and incredibly speedy assistance....you guys rock!"
The direct lender funds the deal based on the ARV (after repair value) rather that the
LTV (the "as is" loan to value). So, the investor is able to buy the property for a
fraction of what the property will be worth after it is "rehabbed". If the ARV is high
enough, the lender can fund up to 100% of the purchase price. In the example above, the
investor can purchase the property at 65% LTV, but the value is based on "after repair
value" not "as is" value. If the ARV is $125,000 the investor can borrow up to $81,250.
So, that means that the investor can pay $50,000 for the property and have $31,250 to
pay for loan costs and fees, holding costs while the rehab is being completed, as well
as rehab costs.
In the example, the $31,250 would be adequate to cover purchase AND those costs and
fees, and then the investor is able to purchase the property for 100% of the purchase
price and without having to make an "out of pocket" down payment. The direct lender will
then "roll" costs and fees into the loan as well as loan the investor rehab costs on a
"draw" basis as the work is completed on the rehab. It is really a simple formula and
once a rehab investor has completed one "rehab deal", the investor is able to do it
again, and again. Again, the key is to focus ONLY on discounted property deals with
substantial "equity" and rehab potential. Some rehab investors do the cosmetic rehab
work themselves and may hire contractors and tradespersons such as painters,
electricians, plumbers, and landscapers for bigger projects or specialty needs.