Hard Money Loan Used To Buy East Los Angeles Fixer Upper

Hard Money Loan Used To Buy East Los Angeles Fixer Upper

A Southern California real estate investor acquired this fixer upper in East Los Angeles using a hard money loan from First Capital Trust Deeds.

Challenge:  This home in a nice neighborhood needed to be updated and renovated with a modern look.  The buyer had flipped a property before but didn’t have an extensive track record under their belt, so they weren’t able to qualify for the 80-90% Loan-To-Value (LTV) of purchase price financing that FCTD often secures for buyers in Los Angeles.  

How much of a hard money loan could he finance on the $230,000 purchase price?    

Solution:  Answer:  75% LTV on the purchase and it could close quickly within 4-5 days.  If the buyer had a little more experience (3+ successfully flipped properties) and needed higher leverage, we could have done 85% LTV on the purchase.   Instead, the buyer had enough down payment to go with a 75% LTV hard money loan.  

The buyer was happy to close the transaction within one week.  For the trust deed investor, 75% LTV was a comfortable position to be on a first trust deed. at 11.00%.   They expected that the borrower would be able to make renovations and resell the house within 6-8 months, which is a pretty standard duration for fix and flip hard money loans held in this particular lender’s loan servicing portfolio.  

Hard Money Loan Terms:

  • $172,500     Loan Amount (75% LTV) 
  • 12-Month Term
  • No Prepayment Penalty

For fix and flip financing scenarios in California, Oregon, or Washington, please contact Brett Everett or Ted Spradlin.

Do you have a similar financing scenario?
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