Property purchased for $100,000
Property worth when repaired $145,000
Repairs needed on the property $ 15,000
Loan amount would be 65% of $145,000 or $ 94,250
The borrower is also charged points and fees to close the loan. These fees,
along with the down payment, make sure the borrower has “skin in the game.”
The property was purchased at $100k, and the loan was for $94,250. The skin is $5,750 plus fees etc. Appraised value is unrealized gain, and not skin in the game. It’s a slight of hand.[/quote]
querty, you gotta really have A LOT of confidence in this flipper to invest in him, IMO. Hopefully, he is a licensed general contractor who gets industry discounts and favorable payback terms on mat’ls. If he is, then why does he need to borrow the fix-up $$, too?? I could see him taking out 2-3 hard-money purchase loans to buy trustees deeds within days/weeks of one another but I cannot see him borrowing the fix-up $$ also. Not at those prices.
