Ask Cornerstone: Can I find 100% financing / no money down loan if I can find a deal at a certain percentage discount of the After Repair Value (ARV)?
In most cases, you cannot find 100% financing regardless of how good the deal is. Usually lenders will provide 70% to 80% purchase money loans. Additionally, many lenders do provide 100% of controlled refurbishment funds. The assumption is that if you don’t have any skin in the game, you don’t have anything to lose. That puts the lender Landscape at great risk if anything goes wrong.
There are a small number of lenders that will provide 100% purchase money loans and fix-up funds, but in those instances, they will keep control of the property (i.e. hold the title). In that instance, you will do all the work and the lender will share profit with you. You will have a contract with the lender that states that the lender will take control of the project if you don’t perform according to the contract. Under this arrangement, your share of profits usually will be greater than if you wholesale the property. At the same time, you are hopefully building a positive track record with the lender. Your good performance will help you negotiate better terms on the next deal. Also note, many of those lenders will require you to pay for the loan costs (e.g. points and escrow costs).