FUNDING
100% FINANCING
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Is 100% Financing an Actual Product? THE ANSWER IS “YES,” BUT IS IT FOR YOU?
By John Santilli
inding the right financing option for your real estate investment project is crucial. One unique product
Although 100% financing is an excellent choice for seasoned investors, your must evaluate your back-end strategy too. Are you a fix-and-flip investor, a buy-and- hold investor, or both? Having the right margin to sell at a profit or cash out as a BRRRR investor means calculating an effective ARV (after repair value) or having cash re - serves. A loan that combines 100% of purchase and rehab with a higher ARV will help ensure you have enough funds to transform fixer-uppers into dream homes at significant profits and ensure affordability. Plus, 100% financing can create higher returns. By leveraging the lender’s money, you can take on rehab projects that might otherwise be too ambitious financially. Traditional loan down payments of 10%-20% or more can pose a significant hurdle for borrowers. With 100% financing, you still pay closing costs and maintain interest reserves, but you have no down payment. A random sample of loans in the past three months compared to our competition showed that 100% financing saved borrowers $20,000-$50,000 at closing.
F
in the private lending space is 100% financing. Many real estate investors are surprised to discover it is an actual product. Like every other lender, 100% lenders ensure you have the qualifying liquidity, credit, and adequate equity to recover the asset in the event of default. The primary difference is that 100% lenders go one step further: underwriting with your cash flow or income as a qualifier. Doing so provides extra comfort the asset is secure and you will succeed. WHY 100% FINANCING? The objective of 100% financing is to fund the entire property purchase price and rehab costs without requiring any down payment. This means you keep as much cash in your pocket as possible to invest more in renovation projects or put in the bank.
34 | think realty magazine :: november – december 2023
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