Liz owned this property free and clear but needed funds to rehab other properties in a different state. She borrowed $50,000 at 10% for 24 months. That's a payment of $416.67 per month to the bank of You. The value of the house is $100,000. If she defaults, the lender takes back the property at a 50% LTV with over $1200.00 in active monthly income.
Property Stats: Loan amount, $50,000, LTV, 50%, Has renters in place.
Jim is a professional real estate investor and had all the cash he needed to fix a house up and re sell it within 6 months. He borrowed money because he wanted the comfort of having a cushion in the bank. Jim expects to make $50,000 in four to six months.
Property Stats: 75% Loan to value, great neighborhood, the borrower has a fat bank account.
Alice and her partners own 13 homes and want to refinance them. While Alice has good credit, banks tightened up their credit score guidelines and now they don't qualify. The only way for Alice and her partners to refinance their homes is to pay down credit cards to bump up their scores. Alice doesn't mind paying $250 per month to save $250 per month. She and her partners will take equity from their rentals and invest in more property It's an easy choice for them.
Property stats: 40% loan to value. Long term renters paying $765.00 per month rent. Good bread and butter neighborhood.
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