Bought a flip, put $50K in rehab, and it wonโt moveโ
I had a borrower last week come to me with this situation โ The market seems fine but he just isnโt getting the traction he needs to sell his flip โ And heโs burning a hole in his wallet paying Hard Money Lending fees every month โ His alternative? A refinance โ- THIS IS WHAT HE DIDNโT KNOW โ- โ ๐จ If a property is listed on the market or was listed in the last 6 months, a DSCR lender will have to use the lowest list price rather than appraised value. ๐จ โ โ What does this mean? โ โก๏ธ If you dropped the price of your property THAT is the value the loan will be based on โ โ For example: โ ๐ Your estimated value of your newly renovated flip + initial list price: $500,000 ๐Your current list price (after a price drop): $425,000 ๐Loan to Value (LTV): 75% ๐Your Desired Refinanced Loan Amount: $375,000 ๐Your Actual Refinanced Loan Amount: $318,750 โ That is a $57,000 difference! โ โ Thatโs money that could have gone to paying your lenders or cashing out to buy another property. โ โ Be effective with your refinances!