HELOC to fund a rehab?

Question

I have my dad’s house (he passed 2 years ago) and am wanting to rehab it & rent it.  My vision is to keep it a while (it’s paid off) and use the cashflow to help with my kids college.  A full interior rehab will be about $40,000.  Would a HELOC or home equity loan on my personal home be a good idea to fund this?  What other options would be good?  Thank you in advance!

Jesse Rivera · Answer

I work with a credit union that does HELOCs nationally. Rates as low as 7.25, depending on credit score and LTV. Shoot me a message and will give you his contact info. I am only licensed in CA so cannot do it for you.

Daniel Tanasa · Answer

Another option is to get a small cash out refinance from the house you plan on fixing up, if is in financeable condition, and use that to fix it up, while still cash flowing. And you are looking at an interest rate around 7% instead of over 10%.

Devin Peterson · Answer

If you can get a better primary residential HELOC rate than you can a hard money bridge loan I would say yes. You'd be looking for HELOC rates better than 10-11% to fund the reno. Local banks and smaller credit unions are most aggressive in this space. Good luck

Devin Peterson · Answer

Thats not terrible - local is better. Credit Unions and mom/pop small banks would be best.

Christina Swaby · Answer

HI Chad, I am in Houston. We use our HELCOC to fund our investment properties (purchase and rehab). Texas has some weird laws that don't allow all banks to have HELOC options. Local Texas only banks will be where you can find them. Ex, can't get one through Chase bank here, but went to our local Credit Union. We love the ability to move cash in and out of the heloc as needed. A 40K rehab doesn't sound too bad either. Good luck and hope it goes well for you!

Bryant Xavier · Answer

Chad,

It sounds like you have a solid plan for your dad's house. Using the cash flow to help with your kids' college expenses is a practical approach. A HELOC or home equity loan on your personal home could be a viable option to fund the rehab, but it's always a good idea to chat with a lender to explore all your options and find the best fit for your situation. I have a great line up of lenders I am happy to make intro's for you.

As a realtor, investor, and owner of a construction company down the road in College Station, TX. I'd love to bid on the project and see if we can work something out on the remodel. Feel free to reach out if you need any assistance or have any questions!

Daniel Tanasa · Answer

Yeah, that could be a good idea if you're confident you can pay it off quick. If you think you will have it for less than 4 years I would say go with the HELOC because you have less origination costs. If you plan to have it for more than 4 years I would suggest to do a cash out refinance because you will save in interest rate.

I hope that helps.

Julia Lyrberg · Answer

Hi Chad!

Using a HELOC or home equity loan on your personal home could be a good option, especially if you can secure a low interest rate and manageable terms. Another possibility is a cash-out refinance on your dad’s house if it qualifies, which would tie the loan directly to that property. Just make sure to run the numbers to ensure the rehab costs align with your cash flow goals for the rental.

Chad Jones · Answer

Thanks Devin, yes was quoted 10 & 11% from rocket mortgage.  Going to shop local to see if I can get a better %.

HELOC to fund a rehab?

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