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You’ve found the house of your dreams at a price you can afford. There’s only one problem: it needs a little (or a lot) of work before you can move in. Many banks won’t finance houses that aren’t up to code or that need major repairs. If your property is in California, private money financing may solve your problems.
SFR Ventures, Inc., can create a custom hard money construction loan based on after repair value (ARV). The ARV of your property will help determine the terms of your loan.
How to Calculate Your ARV
It’s not hard to calculate ARV. First, look at the comps in the area and see what other properties have sold for over the last twelve months. You can either find someone to do this for you or you can sit down and figure it out for yourself.
When you calculate the ARV, don’t determine the amounts based on what others say the value of the property is worth. Base your figures on the selling price of similar properties. . Be aware of outliers that may throw your average. Keep your property reevaluations to within 10% of their values. This way you’ll know how big a hard money loan you can expect. Remember to keep your estimates on the conservative side. That way you’ll have realistic expectations for your loan.
Be Open to Advice
Determining ARV is not an exact science. Your property may have unique features which change the estimate. Be prepared to discuss the ARV with your hard money lender. Lenders have a keen sense of the state of the local market and available financing. You may be pleasantly surprised by the available financing, especially in the Bay Area.
Just remember that hard money loans are short term loans. Know your repayment schedule before you borrow. Since your property is the collateral for the loan, lenders are willing to take a risk on your home rehab project. The good news is the property is your asset to potentially obtaining your loan.
If you are in the market for a hard money loan in the San Francisco Bay Area, SFA Ventures, Inc. will answer your questions and simplify the lending process. SFR Ventures, Inc. is located and headquartered in Northern California, but we do lend throughout the state. Call Beau Eckstein at 925-852-8261 or visit SFR Ventures, Inc. on the internet at http://reiloanpro.com if you need a loan to update and rehab your new home.