I speak to many investors who see projects that they would love to participate in, but lack the capital to purchase and renovate the property. Often times, a project for a single family home in a desirable neighborhood in North Palm Beach County will run around $250,000-$350,000. Most homes that are older (built before 1980) will be outdated and thus are great opportunities for renovation projects. The cost of a modest renovation would run around $50,000-$80,000. If you combine a purchase price of $250,000 with $80,000 in renovations, you would have an acquisition cost of $330,000 with an off-the-market time period of 3-6 months just for the renovations alone.
The would mean the investor(s) would be tying up about $330,000 for an extended period of time. If you consider that the investor needs time to complete the entire project with all of his/her capital at risk during the process. This could be from 6 months to 12 months based on how quickly the property can be purchased, renovated, and sold on the open market.
Financing for these types of projects has traditionally been difficult to find; especially since most loans would not be based on the after-improved value. One little known program that many savvy investors are turning to is FNMA Homestyle Renovation Loan. The homestyle renovation loan is modeled after the very popular FHA 203k Loan. One major advantage of the FNMA Homestyle loan is that it allows not only primary residence home buyers; it also allows 2nd home buyers and investors to purchase and renovate a property with one loan. In fact, investors can purchase and renovate an investment property with as little as 15% of the acquisition price. Instead of an investor fronting $330,000 he would only need just under $50,000 plus closing costs.
For additional information, call Florida's Renovation Loan Expert Michael Cantwell at 561-262-5366.
Branch Manager, Highlands Residential Mortgage, Ltd., Palm Beach Gardens Florida
My website - www.MichaelCantwellTeam.com
My Mobile # 561-262-5366
Branch Manager - NMLS: 644428
Highlands Residential Mortgage, Ltd. - NMLS: 134871
Highlands Residential Mortgage, Ltd. is an Equal Housing Lender – This is not a commitment to lend.