Q: What is a REHAB property?
A: REHAB is short for rehabilitation. These are properties that are purchased with the intent of selling for profit after the improvements or rehabilitation has been completed.
There are many kinds of REHAB properties. Some properties my only need some cosmetic work. These properties can be ready for resale with just some simple paint, new carpet or perhaps new fixtures.
Other types of REHAB require a little more work. Some properties may be damaged by fire, flood or poor upkeep. These properties are more labor intensive. Some activities may include new roofing, new plumbing, stucco, landscaping, moving walls and even adding on additional rooms or floors.
Q: What is “A.R.V.?”
A: After Repair Value. We lend money based on the After Repair Value or Future value.
Q: What is “Future Value?”
A: Future value is the appraised value of the property if it were completed today. The appraisal assumes that the construction or rehab is completed within a specific time period and is compared to like properties in the immediate area.
Q: What if no repairs are needed?
A: If you're buying the property at a discounted price and no repairs are needed, we will offer you a loan base the "as is value". Our appraiser will be able to provide the curent as is value and we will lend on that as opposed to the purchase price.
Q: What is “Loan-to-Value (LTV)?”
A: Loan-to-value is calculated when you take the loan amount and divide it by the future value of the property. For example, if you have a project that has a future value of $500,000 and you need a loan for $300,000 to complete the project, your loan to value would be 60%.
$300,000 / $500,000 = .60 or 60%
Q: How much financing can I receive for my REHAB project?
A: It depends on the after repair value of your project when completed. We lend using the future value of the property if it were repaired today.
We typically lend up to 65% of the after repair value.
Q: How fast can I obtain financing for my REHAB project?
A: The application process takes 24-48 hours after we have received your:
1) Completed and signed application.
2) Income requirements vary, both Full Documentation and Stated Income programs are available.
Then we will ask you to prepare a line item budget for the repairs to the property. Once the budget has been submitted we will order a future value appraisal of the property. The appraisal takes about 2-5 business days.
After the appraisal has returned we can prepare documents for you to sign. This process takes anywhere from 10 days to 3 weeks depending on when we receive all the items described above.
Q: How much can I borrower?
A: It depends on your ability to qualify for the financing. We want to make sure that you can afford the monthly payments.
Q: What does REO stand for?
A: Real Estate Owned. These are properties owned by lenders & banks, because the borrower defaulted on the loan, and the lender took them back after an unsuccessful sale at a foreclosure auction.
Q: How do we determine the future value or after repair value?
A: We send out our independent appraiser who is familiar with real estate in your local area. You give the appraiser an itemized list of repairs and improvements that you'll make to the property. The appraiser then determines the property's future value after all the repairs are made.
Q: Where do I find REHAB properties in California?
A: This is a GREAT question! There are many sources to find properties available for purchase. The best way is to contact your local Real Estate Agent. They are the most qualified to help you search for what your looking for.
Lenders, major banks and our government can be a good source for REO's.
The links below may help you find that perfect rehab project.
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FREE access to over 20000 Foreclosures, REOs/Bank Owned, and Short Sales properties in Orange County, Los Angeles, Riverside, and San Bernardino.
First Team Real Estate http://www.foreclosuredestination.com/
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Q: Tell me about local realtors in California?
A: The chances of your purchase offer being approved improves if your communication with the bank is organized. This is why we recommend using a local Real Estate Agent that's seasoned in REO purchases.
Q: What type of properties are good rehab properties?
A: Single Family Residences are some of the best properties to rehab.
Vanguard Funding Corp will also finance the rehabilitation of multi family dwellings, apartments and some light commercial. Call or email us if you have questions regarding property type.
Q: How many projects can I do at once?
A: We want you to start with one or two projects. As you get familiar with our lending practices and have a proven track record. We can increase the amount of project we will finance on a case by case basis.