Direct Hard Money Lenders – How to Calculate an Offer Price of a Property?

We all receive a lot of queries related to the purchase price, repair costs and offer price of the properties. People need to know the calculation process employed by direct hard money lenders for making an offer because it is a known fact that hard money lenders only give 70%of market value after the repairs have recently been completed on a property. Licensed MoneyLender Singapore

First and foremost, you need to realize that the offer price and repair costs are two separate containers of money.

Lenders can fund you up to 100% of these two containers but both of them should be equal or less than 70% of ARV (after repair value). 

This will not mean that you will all the money together for closing the deal.

You will get a particular sum of money for purchasing the property at closing desk and the repair money will be deposited into an escrow account after the deal is sealed by a hard money lender.

If you are in a perfect situation, you won’t have to include any money as repair costs into the offer.

Let me make clear this in detail.

It is very important figure out what kind of repairs you are willing to do and get an idea. After that you should determine the ARV. You need to take 70 percent of after repair value and subtract the repair costs.

This is the maximum amount which you will get as a deal and still get financing for the purchase price and repair costs.

On the other hand, you need to be very careful while estimating the repair costs and ARV.

Although you need to keep in mind that the final amount of D?DSBO and repair costs would be based after what have been finalized by direct hard money lenders, not you.

This is usually quite different from the calculations of an investor.

Lenders usually retain the services of the services of two different property evaluators to look for the EJENDOM and repair costs. The two of them send more than a dozen comps after evaluating the house.

This kind of is an extremely effective system for deciding the ARV and repairs, which is followed by few lenders like us.

Consequently, if you are fine with putting some money down or purchase repair costs of the house, you can amend the offer price.

Another important thing, which you should keep in your thoughts, is the fees that are anticipated during loan closing because direct hard money lenders will not finance that. This would be between 4-6% of the total loan amount and you will have to pay it from your pocket.

The crux of the history is that you’ll have to focus on several different offers before you get the numbers that make sense.

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