Welcome back to the Close More Deals podcast. I'm your host, Scott Dillingham. Today, I'm gonna be talking to you about purchase plus improvements. We can also do refinance plus improvements. This is an underrated tool and resource that the lenders have to maximize your client's property's value and condition to make it easier to sell.
Scott Dillingham:So there's a couple of things. Most lenders are used to the property values being much lower than what they are now. So most lenders across the board will only give you $40,000 of renovation money for purchase plus improvements, where others will give you an unlimited amount as long as the property appraises. So be careful of that when you're working with this program with your borrowers. Now how this program works if you haven't done it, when you're making a purchase, we get a quote for the renovation expenses.
Scott Dillingham:The lender will build it all into the approval, and what they do is they fund in stages or in lump sum depending on how it's set up. But ultimately, the client has to do the work in the property, and then they get the renovation money, and they're good to go. Now, the benefit of this is they can turn any property that maybe it's ugly, maybe they don't like the kitchen or bathroom or the paint or whatever, and allows you to still have them potentially move forward with the property as long as they know about the plus improvements. Now we've done this on properties that are heavily distressed that a lender wouldn't normally lend on as well. We did the purchase plus improvements, and then they were able to move forward because they saw that the work was gonna be done and it would be livable condition and they were happy with that.
Scott Dillingham:So keep that in mind. So there's a lump sum, like I mentioned, and there's also the progress draw. So progress draw is when one third of the work is done, you get a payout. When two thirds is done, you get a payout. And when the final amount of work is done, you get the final payout.
Scott Dillingham:Depending on the size of the construction, some lenders might want to do that. We can also do it when we do a refinance. So if somebody is trying to refinance their home and say maybe they don't have all the equity needed, but there's some massive things that they have to fix on the property before it sells, we can do the refinance plus improvements where they'll value the property based on what it will be when the work is done, and they'll lend based on that. So it's all as long as it's all within guidelines, they'll move forward and do it. So then on your end, it makes it easy to sell the property, which is what you want.
Scott Dillingham:So super cool stuff. Lots of good programs. This happens. We can do this program on residential. Some commercial, we can do it, but it's very, very rare.
Scott Dillingham:And also rental properties as well. I wanna highlight that because a lot of lenders, they won't touch it on rentals, but we've got those that do too. So lots of options. Updated rates and everything will be in the show notes as well as additional details and resources for you. Looking forward to connecting, and I hope you have a great week.