ARV PRO: Your Fix & Flip Loan Solution
- May 15, 2024
- 3 min read
Updated: Aug 15, 2024
Enter the realm of fix and flip loans, a dynamic tool for real estate flippers seeking to elevate properties to new heights and reap the rewards of increased value. At The Trye Group, we redefine the landscape of commercial investment lending, offering a loan solution for fix and flip projects that surpasses the traditional hard money approach.
Understanding ARV Loans
ARV, or After Renovation Value, represents the estimated worth of a property after it has undergone renovation. Typically, lenders offer loans ranging from 65% to 90% of the ARV. For instance, if you anticipate selling a property for $1,000,000 post-renovation, a loan at 65% ARV would amount to $650,000.
The Trye Group ARV Loan Difference
Picture this: Loan to Cost (LTC) calculations determine your eligibility for total loan amounts, while After Renovation Value (ARV) sets the stage for a transformative journey, typically ranging between 65% to 80% of your ARV. Unlike conventional financing, our fix and flip loans are tailored for agility and efficiency, boasting short-term limits spanning 12 to 24 months, depending on the scope of your renovation project.
An ARV Loan Example:
Suppose you secure a lender offering 80/100 terms for a fix and flip loan. If you're purchasing a property for $700,000 and allocating $100,000 for renovations, your total loan would amount to $660,000, inclusive of closing costs and fees.
$700,000 * 0.80 = $560,000
+ $100,000 rehab= $660,000.
Keep in mind that while a lender offering 65% ARV may not suffice for a property with a $1,000,000 sale price, a lender providing 70% ARV would be more suitable.
How is Interest Charged?
Lenders may opt to charge interest on the entire loan amount from the loan's inception or only on disbursed funds. This distinction significantly impacts the total repayment amount over the loan's lifespan. Therefore, it's essential to factor in this aspect when drafting your budget.
How Do Reimbursement Draws Work?
Reimbursement draws are a common practice among lenders. This involves submitting receipts for completed renovation work to the lender for approval. While some lenders advance funds upfront based on your track record and project history, this isn't the norm. Additionally, be mindful of the lender's draw fees and aim to limit draws to a maximum of 4 to 5 per project to avoid excessive fees.
How Your Experience Level Can Impact Your Loan
Lenders heavily consider your project experience when determining loan rates and terms. With prior successful flips, you're more likely to qualify for better terms. Different lenders have varying criteria for their top-tier programs, with some requiring as few as one successful flip, while others may mandate up to 20 flips within a specific timeframe. Achieving top-tier status typically results in lower down payment requirements, better interest rates, and potentially reduced origination costs.
How Long Does The Closing Process Take?
Given the competitive nature of the fix and flip market, a swift closing process is crucial. While some lenders can close flipper loans within 3-5 days, others may take 3 or more weeks. At The Trye Group, we're dedicated to YOUR success. We aim to close in 21 days or less!
The Best Loan Solution For Your Fix And Flip
Investing in a fix and flip real estate project can be a lucrative venture, but it also comes with its own set of challenges. That's why it's crucial to have a trusted partner by your side to navigate through the process. At The Trye Group, we are committed to providing you with the best support and guidance through our ARV Loans. With our competitive rates, flexible repayment terms, and expert team, we are the top choice for investors looking to make the most out of their investments. Contact us today to learn more about our ARV Loans and how we can help you achieve your investment goals!
