Example of a Fix and Flip Scenario:
Purchase Price of Property: $200,000
Required 30% Down Payment: $60,000 (30% of Purchase Price)
Estimated Rehab Costs: $75,000
The Loan on the Purchase will be $140,000 ($200,000 less the required 30% down payment) PLUS we will provide $75,000 for the Rehab (100% financing for rehab costs if the deal supports it). The TOTAL LOAN AMOUNT will be $215,000 ($140,000 + $75,000).
There will be 5 Points (5%) Charged on the TOTAL LOAN AMOUNT, which is a Closing Cost that will need to be brought to the closing on the purchase, in addition to the 30% Down Payment on the Purchase Price.
5% of the TOTAL LOAN AMOUNT ($215,000) is $10,750
30% of the Purchase Price ($200,000) is $60,000
Approximate Funds Needed to Close is $70,750
The Approximate Funds Needed to Close “does not” include the typical closing costs associated with Title / Attorney Fees or any other possible adjustments, so assume that there would be another $2,500 or so to add to the Funds Needed to Close for a Total of around $73,250 (give or take), based on the example shown above. The Closing Attorney’s office will prepare a HUD-1 Settlement Statement before the closing that will detail all Closing Costs
associated with the transaction and that will have an EXACT number needed by the buyer / borrower to bring to closing, which includes the Down Payment and Points noted above.
We are here to help, so please ask us any questions you may have and feel free to request a call or other information to be sent via email. Thank you for your time and we look forwarding to helping you with your Fix & Flip transaction.