Purchase and Rehab After Repair Value Hard Money Loan

Refinance/Rehab loan

Purchase Loan

For an After Repair Value hard money purchase loan, 75% of the purchase price plus 100% of the rehab cost. – this total dollar amount must not exceed 70% of the ARV (after repair value).

Hard Money ARV Rehab Loan

This pertains to where the borrower already owns the property and is looking for cash out to rehab the property. If there is a current lien on the property, then that lien plus the loan closing costs and any potential fees would be based on the current as-is value. The rehab and any interest reserves would be based on the After Repair Value.

After Repair Value Example

For a rehab loan here in California, the existing mortgage note lien balance is $1,000,000, the current as-is value to cover this would need to be $1,428,571. You would calculate that by taking the dollar amount of $1,000,000 and dividing that by 70%. Now the borrower needs $500,000 to rehab the property. Add the $500,000 to the $1,000,000 and divide that number by the 70%. So for the "after repair value" hard money lender to pay out the $500,000 in rehab cost, the ARV would need to be, at minimum, $2,142,857.


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