Are you short on downpayment funds for your rehab?  This program can solve that problem for the right deal, if you are willing to share a portion of  the profits.

Terms:

  • Max loan amount 70% of After Repaired Value
  • Loan for 75% of purchase price and 100% of rehab budget
  • Lender provides the additional 25% of purchase price downpayment (see equity share below)
  • Minimum 3 month term, maximum 12 month term
  • Receive 20% of rehab budget advanced at closing

Geography for 100% financing program:

  • Metro Boston and South along Rte 3 Corridor to Plymouth
  • Prefer inside 128
  • Will consider inside 495

Costs:

  • 15% interest, monthly interest-only payments required based on outstanding principal balance
  • 1 point and $1000 attorney fee due at commitment, additional 3 1/2 points at closing (Total 4 1/2  points)
  • Lender shares equity in the project totalling 25% of net project profit after paying all hard and soft costs
  • Option to roll lender fees due at closing into the loan, subject to LTV limits of 70% of ARV
  • $2900 Partnership Funding Fee due at closing
  • $150 Initial site visit inspection
  • $225 per site inspection and disbursement of rehab draws.  Fee deducted from draw disbursed.

Frequently asked questions:

  1. Who determines the ARV?
    1. You should always establish your own ARV before making an offer on a property, however, we will establish a conservative ARV based on local comps.
  2. Will you roll the interest payments into the loan?
    1. No, however we will roll the $2900 fee and the portion of the points not paid at commitment (3 1/2) into the loan if the amount stays below the 70% threshold.
  3. What’s the difference between 100% financing and this program?
    1. The loan is for 75% of the  purchase price and 100% of the rehab, subject to 70% ARV.  The 25% of the purchase price is provided by the lender with a partnership agreement in exchange for 25% of the profit and a partnership fee of $2900.  The end result is pretty much the same, but the structure and paperwork are different.
  4. How do I take title?
    1. You must take title in a single purpose LLC – no individuals, no realty trusts.  This means you will not use that LLC again, and that your offer & P&S must be in the name of that LLC.  Alternatively, your offer could read “Joe Investor and/or nominee”.  That allows a different entity than the person named in the contract to take title.
  5. How do you calculate the profit?
    1. Sales price
    2. less purchase price
    3. less all costs on the HUD at purchase and at sale
    4. less rehab costs
    5. less finance and carry costs. 
    6. What’s left is profit, which will be disbursed to the lender at closing when the property is sold.