Rehab $$$

[AIR]

how do most of you fund your rehab money? I am just trying to figure where I will be able to get some extra $$$ to do all the repairs for my possible deal. At first I was thinking I could get a home equity loan, but if I am buying a house under market value in need of repairs it wont have equity in bad condition, right?

[Jeffery (LCLA)]

Some lenders will lend repair funds, too. I recommend that you set up a commercial account with Lowe's, Home Depot and other home improvement stores. Clean up your credit (if need be) and get credit cards to use for home repairs. Get a second mortage or LOC on the property. You can try asset lenders. You know, those people that lend you money and you put up personal property as collateral. High interest rates, though.

[AIR]

thanks for the reply, my credit is a little above average but I would imagine the store credit cards are high interest as well???... I have researched some rehab lenders but most start around 50K min. with points and high interest rates, whereas I am only looking for 15K-25K. I have also thought about getting a personal loan through my credit union which is only 10.5%

generally how long do second mortgages take to establish? and how do you get a line of credit and what are the standard rates?

my father also suggested I might be able to get the mortgage for more then I paid, how do you do this?

[brianb_cobbres]

thanks for the reply, my credit is a little above average but I would imagine the store credit cards are high interest as well???... I have researched some rehab lenders but most start around 50K min. with points and high interest rates, whereas I am only looking for 15K-25K. I have also thought about getting a personal loan through my credit union which is only 10.5%

generally how long do second mortgages take to establish? and how do you get a line of credit and what are the standard rates?

my father also suggested I might be able to get the mortgage for more then I paid, how do you do this?



generally how long do second mortgages take to establish? and how do you get a line of credit and what are the standard rates?

You will probably have to deal with title seasoning which means you have to show chain on title for 6 and more likely 12 months. Then again that is for non-owner occupied. Any chance you can move in during the renovations. Owner occupied and you should be able to get a second with out many problems.


my father also suggested I might be able to get the mortgage for more then I paid, how do you do this?

See above, and any refinance is going to based on current condition not just on comps so the required repairs may hold the value down.

[brianb_cobbres]

how do most of you fund your rehab money? I am just trying to figure where I will be able to get some extra $$$ to do all the repairs for my possible deal. At first I was thinking I could get a home equity loan, but if I am buying a house under market value in need of repairs it wont have equity in bad condition, right?

Do you already own the house? If so then see my previous post. If not, then talk to a few mortgage brokers about construction to perm loans that can be used for rehabs. They are out there and will give you the purchase and rehab money as part of the same loan then automatically convert to a tradational mortgage on a predetermined date. That is unless you sell it first.

Then there is always hard money for both purchase and rehab. Expensive but gets you what you want.

[sandman70]

I went to my bank and put my truck up as collateral, got a loan with no interest and no payments if paid back in 6 months. If not the interest is 7%.:SM029:

[Debbie]

how do most of you fund your rehab money? I am just trying to figure where I will be able to get some extra $$$ to do all the repairs for my possible deal. At first I was thinking I could get a home equity loan, but if I am buying a house under market value in need of repairs it wont have equity in bad condition, right?

For starters, we saved money for rehab.

As time progressed, we used credit cards. But those cards were fully paid each month to avoid interest rates.

[Debbie]

thanks for the reply, my credit is a little above average but I would imagine the store credit cards are high interest as well???...

I looked back on the Lowes Commercial statements. It doesn't show any interest nor late fees (we pay it off each month).

However, I did go into www.lowescredit.com where I normally pay via online.
This is what it said:
"The second-largest home improvement retailer in the world has launched a new card that gives consumers a six-month project window to make as many purchases as they like without incurring any interest or required payments. Lowe's and GE Consumer Finance have teamed to offer the new "Project Card." Under the program the customer opens a "project window" with a project purchase of at least $1,000. The customer can continue to make purchases during the six-month project window until the project is complete, without having to make any payments or have any interest accrue. After the six-month purchase period ends, interest accruals begin and fixed monthly payments begin. Another project window can then be opened for another project. Interest rates charged are based on credit risk and currently range from 8.49% to 18.49%. The interest rates are variable and based on the prime rate. For more information visit: http://www.lowescredit.com/projectcard."


Personally, we like Lowes Commercial statement is very detailed!

[Dan Auito]

Thanks Deb. I signed up and the card is in the mail. I'll use it on my upcoming project. Good deal!

[dwford]

I used credit cards for my entire flip, downpayment to renovations to marketing costs. While I used low interest checks - never more than 5.9%, keeping up with the payments and maintaining the short term low interest rates was difficult, especially after the renovations were complete and I was marketing the home.
I'd suggest saving the money, unless you can float your usual monthly living expenses plus the flip mortgage and costs for an indefinite period of time. I got to the point where I had just started transferring balances onto my last empty credit card, and then writing checks on the ones I just emptied when my house sold. I was getting very nervous.

[Dan Auito]

Did you make money and pay off all your debt when it was over?

[dwford]

Well, I'm still working on it. I ended up selling my residence instead, and will close by the end of the month. At that time, all the debt related to the flip will be paid, and I'll have real equity int the house.

[Deja Fouts]

For people planning on purchasing a reno property as a primary residence the 203K seems like a great option. I think you could even use this on a multifamily property up to four units. For the first time investor I think it is a great way to go.

[Investment Loans]

If you have to use a hard money rehab lender, and their minimum is $50k, ask if they will blanket 2 properties together. What area are the properties in? I know several that will do this.