This transaction was for the acquisition and rehab of a property located in Riverside County. The property was in need of a lot of cleanup and cosmetic repairs and our clients got a great deal on it. The pool in the back was empty, but our clients had it tested and found all the equpiment to be in working order – the former owner had simply drained it due to operating costs. The rehab consisted of new stucco, windows, doors, appliances, new paint and the addition of granite counters in the kitchen.
The purchase price of this property was $172,000, and $20,000 was allocated for the rehab work to be done. Our hard money rehab loan was able to fund a gross loan amount of $188,500 on this particular transaction, which included funds for the work to be done as well as interest reserves for six months – so our client had no payments to make for the first six months. In addition, the loan had no prepayment penalty, so as soon as the work is completed and the property sold the loan can be paid off. Any unused interest reserves are credited back to the borrower.
The estimated after repair value on this property is $290,000, making for a nice spread for our client. With transactions like this where there is a nice profit potential we have some very aggressive programs to help real estate investors leverage their existing capital. Our hard money rehab loans are not credit driven, although we do require a credit report in the file. In addition, our rehab loans are not capped based on a percentage of the actual purchase price. Rather they are structured to use the after repair value, or ARV, of a property. Visit our main rehab lending page for more information on Riverside hard money rehab loans.