How important is the rehab list for a fix and flip project, really?
The answer is simple, it’s extremely important.
Having a detailed renovation’s list when applying for a fix and flip loan is vital for the appraiser to develop a better understanding of the scope of the project and how much value the investor will be adding to the home.
When ordering an appraisal with a Private Lender, like RCN Capital, both the rehab list and the appraisal order form are needed. The appraiser is then going to look at two values: the current market value and the After Repair Value (ARV). With the rehab list being as detailed as possible, with the costs associated with each repair, the appraiser can then successfully determine the After Repair Value, which can determine the amount of the rehab loan.
Even though each investor has a different method of completing a rehab project, from stripping down to the studs, or adding luxury finishes, writing down the level of finishes on the rehab list is extremely important. The small details matter!
For example, when adding “updating kitchen” to the rehab list it’s essential to go into detail about each specific update. Will there be granite counter-tops or laminate? Custom cabinets or stock cabinets? Stainless steel appliances? These details will help the appraiser determine an appropriate After Repair Value.
Now that you have each detail of the renovation in the rehab list it’s just as imperative to have each cost associated with each detail. This is extremely important when reaching out to a Private Lender for a rehab loan, as this will show each specific detail of the renovation and the costs associated. Most Lenders will provide their own template rehab list to fill out, but many will also accept your own personalized rehab list as well.
Overall, be clear with your numbers, crunch them several times to make sure that the totals match and that something wasn’t counted twice or that a line item was omitted. The more accurate and detailed your rehab list is, the more accurate your appraisal value will be and the easier it will be to secure a rehab loan.
As a direct private lender, RCN Capital is here to help you fund your next fix and flip or fix and lease project. Our experienced loan officers and in-house underwriting help the process run smoothly and quickly, and we look forward to working with you.
Written by: Eileen Mazza & Erica Sikoski