Summary of the HEF Program
Summary
1. We offer funding for up to 97% of the purchase price to REI Pros who have a fully qualified purchase that is ready to go, i.e. the purchase price vs. the ARV is 70% or less;
2. The property is under contract with the seller;
3. The appraisal is done, showing both the ARV and FMV
4. The REI Pro has:
a. already put aside 5% of the purchase price to cover closing costs, a modest interest payment reserve and 3% of the down payment;
b. needs 97% of the purchase price;
Math Details, Generic Example
Here is an example of a generic investment scenario. It is based on a real estate investment potentially being undertaken by an experienced REI Pro, with good credit. He has an investment property he can acquire with a 70% ARV or better. He needs 97% of the purchase price.
A. What follows are details for a generic JV deal.
- It is based on a cosmetic-only rehab project undertaken by an experienced REI Pro. Time frames from beginning to end of the average for this type of no-permit project usually takes a few months. The REI Pro has an investment opportunity that he has penciled out as viable; it is ready to go.
- The numbers that follow:
a. May have been rounded slightly up or down.
b. May or may not reflect current costs in your area, due to regional variations in the costs for labor, supplies, loan rates, etc. The following are just “ballpark” estimates and are not intended to reflect current market conditions and may not include all fees, costs and expenses. Due to changing market conditions over time, please only use the following as a rough guide about how to fill out the form below.
B. Deal details, prior to close
| 1. After Repair Value (ARV): (confirmed by a recent appraisal) |
$900,000 |
| 2. Fair Market Value (FMV) of the property to be acquired: (confirmed by the same recent appraisal) |
$750,000 |
|
3. Purchase Price/PP:
($582,000/97%/CTF + $18,000/3%/REI Pro)
|
-$600,000 ———— |
| 4. Gross profit ($900,000/ARV-$600,000/PP) | $300,000 |
| 5. CTF equity profit (discount from the seller), 10% x $750,000/FMV |
$75,000 |
| 6. Remaining balance: $300,000/#4-$75,000/#5 NOTE: This is the REI Pro’s potential profit, less: cosmetic rehab expenses, closing-related costs, promissory note interest expense, etc.) |
$225,000 ———– $300,000 |
| 7. Purchase Price | $600,000 ———– |
| 8. After Repair Value (ARV): | $900,000 |
C. Deal details, at closing
|
1. FVN (Face Value of the Note) that CTF receives at closing
($582,000/#B. 3. above + $75,000/#B. 5. above)
|
$657,000 |
| 2. Estimated amount REI Pro receives in 6 months (after the sale or refi of the property, $18,000 DP/#B. 3. above + $225,000/#B. 6. above) |
$243,000 ———– |
| 3. After Repair Value (ARV): | $900,000 |
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