QUESTION: How did this buyer obtain a 93% LTV hard money fix and flip financing loan on this purchase?
After Repair Value is the potential resale value of the home after it has been fully renovated. In this case, the resale value of the property comped out close to $350,000 while the buyers were paying $240,000, which was well below the $300,000 AS-IS Value. Since there was so much built-in equity already in the deal with very little renovation work (<$5,000) needed to put it back on the market, the trust deed investor (lender) was comfortable going with a 93% LTV purchase money loan. Plus, the borrowers had a successful track record of buying and selling homes in Los Angeles County. Overall, the loan at 93% LTV made sense for all parties involved.
93 LTV Hard Money Fix and Flip Financing Terms:
- $240,000 Purchase Price / $300,000 AS-IS Value
- $350,000 After Repaired Value – ARV (estimated)
- $223,000 Loan Amount (93% LTV purchase / 63% LTV of ARV)
- 11.00% Interest-Only
- 12-Month Term
- No Prepayment Penalty