Does Hurst Lending offer rehab loans? Does Hurst Lending lend based on after repair value? The answer is absolutely to both! In the state of Texas, Hurst lends to real estate investors based on the after repair value (ARV) of a property that needs some updating or repairs to increase the value. After repair value is a value based on the appraiser’s assessment of the “as is property and the scope of work that the investor plans on doing to the property to improve the value.” There are any number of lenders who will make hard money loans to real estate investors to improve and rehab properties. So, what makes Hurst landing special? Well, there are a few things that set us apart from the competition.
The first is traditional hard money lenders ONLY lend to investors for rehab. In fact, the average hard money lender does not even have an NMLS number. What this means is they can only make high-cost rehab loans. They are not even licensed to make any other kind of loan. As a result these traditional lenders are not always informed of the complicated rules of take-out financing. Hurst routinely gets calls from folks who are looking to refinance away from a hard money loan but the property, or something about their file, does not allow them to do so. This can be catastrophic for an investor. Because Hurst offers all kinds of financing, we can make sure that your property, and your situation, has a take-out option. This is to protect you as a borrower. Hurst’s expertise will make sure you do not get stuck with a loan you cannot get out of.
Hurst Lending will lend up to 75% of the after repair value, or up to 100% of loan to cost, whichever is less. The 75% after repair value number is 5% higher than the average 70% after repair value that most hard money lenders will lend to. But what exactly does loan to cost mean? Loan to cost is the cost to purchase a property plus the cost to rehab the dwelling. If you meet Hurst’s lending requirements we will lend you all the dollars you need to purchase and rehab the property. Let’s look at an example to make this math a bit easier to understand:
Assume a $150,000 purchase price with about a $35,000 rehab budget that will result in an after-repair value of $250,000.
$250,000 ARV *75%= $187,500; $150,000 purchase price plus $25,000 rehab= $175,000
The maximum Hurst Lending would lend on this property would be $175,000 as that is 100% loan to cost. But, again, this loan funds the purchase price of the property, as well as 100% of the rehab budget.
The last advantage to doing business with Hurst Lending that we will talk about here for a rehab loan is our unique modification program. This unique modification program works for borrowers who are looking to B.R.R.R.R. (Buy, Rehab, Rent, Refinance, Repeat). Most long-term financing programs will allow you to rate/term refinance a non-owner-occupied property up to 75%-80% loan to value, but you can only pull cash out up to 70 or 75% loan to value. Many long-term products, including conventional loans, require you to have owned the property for at least six months before using the improved value to be able to pull cash out.
Our modification program allows us to modify the existing loan up to 75 or 80% loan to value, advancing that cash before we close on the long term 30-year fixed loan. That way you receive the funds in your pocket to be put towards your next deal and refinance at the highest loan to value as a rate term, instead of a cash out refinance. This maximizes your cash in hand and eliminates the need to wait for six months — truly B.R.R.R.R. and unique to Hurst Lending.
To discuss these advantages or any other questions about rehab financing with Hurst Lending, contact Jay Hurst at email@example.com or 214 629 7909.
Jay Hurst is a Residential Mortgage Loan Originator (NMLS# 323441), real estate agent, and financial planner. He has founded multiple successful businesses in the mortgage lending space, and is dedicated to helping consumers avoid the red tape and limitations faced in working with larger lenders. Jay holds a BBA in Finance from Texas A&M University, Class of 2000.