Calling All Rehabbers

Calling All Rehabbers

Over the past two years we've all watched real estate prices come crashing down, in many cases forcing lenders to foreclose and take back the property. Although this is a misfortune for some, it is a tremendous opportunity for others. Fairfield has always been of the opinion that the profit is in the purchase, and now more than ever banks are willing to unload their inventory at a discount below market value. To encourage the sale of the growing home inventory, President Obama instituted a short sale program on March 8, 2010, offering small incentives to lenders to accept amounts lower than the principal balance. The NY Times report can be seen at

Purchase and rehab loans are one of our specialties. Here are some guidelines for what we’re looking for and what we’re able to fund in a rehab loan.

70% of the ARV – Depending on the area and the strength of the borrower, 70% LTV is our target (including fees). We hold construction funds in an escrow account, which enables us to loan off the ARV, not the purchase price.

Loan Size – Right now our sweet spot is in the $150,000 - $250,000 range, although we'll consider loans from $50,000 - $500,000.

100% Financing – Yes, we can finance 100% of the acquisition and rehab costs, assuming that the LTV is appropriate.

Down Payment – We do require that the borrower have some skin in the game for at least the first few loans. Generally speaking, this amount can be as little as 5% down, but it's really a case by case basis that depends on the property and the strength of the borrower.

Secondary collateral – If a down payment isn't feasible, we can always consider the use of a second property as collateral. This is another way to demonstrate some skin in the game.

Primary Residence – We can consider purchase and rehab loans for personal use in the state of Oregon only. The same terms apply to personal and investment loans.

Term – Typically, these are 12 month deals with no prepayment penalty. Multi-family rental properties can go a little longer, but these are all on a case by case basis.

Exit Strategy – As always, this is critical. We're looking for borrowers with a solid exit plan.

Knowledge of local market – This goes hand in hand with the exit strategy. We want to be sure that our borrowers are familiar with the current market trends, and that their plan is consistent with local market activity.

For more information on this matter, please visit the Rehab and Construction loan FAQ on our web site at

-Kris Gillmore