Renovation money

7 Replies

Hello, I'm actively look for my first rental property now and I've noticed that most of the houses I go to needs a little TLC.

My question is, what's the best way to come up with renovation funds (ex. the money to fix up a bathroom or kitchen?) Should I be using out of pocket money or find other creative was to fund these projects?

Talk to a mortgage broker about getting a renovation loan. My renovation costs were wrapped up into my home loan. Good thing about that is you will only pay a down payment on both the home loan portion + the renovations. :-) Bad thing is you have to have a licensed contractor (in case you were planning on doing the renovations yourself). 

Brianna, Could you give me more information about the process you went through? I am super detail oriented, and we're looking at our first house right now. Trying to finance through a renovation loan, but might have trouble coming up with the higher down payment (once its calculated on future appraisal). Says seller only accepts cash or conventional, did you do conventional? Or did you do FHA?

@Maurice Caulk

Have some of your personal capital for the project.  Borrowing money this early in the game for renovation expenses doesn't sound like a good plan.  


Frank

[email protected] | CA Agent # 01957844

Originally posted by @Frank R.:

@Maurice Caulk

Have some of your personal capital for the project.  Borrowing money this early in the game for renovation expenses doesn't sound like a good plan.  


Frank

 Yeah that's what I was worried about. I didn't think it would be a good idea to start out with the double loan. I read some people took some equity out of the house to do renovations also.

@Maurice Caulk

I'm a believer in using existing equity to finance yourself to the finish line.  The only thing I don't like is taking out a unsecured loan or second loan on your rehab property.

If you have primary residence with equity, get yourself in a position now prior to buying a property, get a line of credit a line you can use to operate with. 

Running out of cash is like drinking to much beer at the bar, you make very poor decisions.


Frank

[email protected] | CA Agent # 01957844

Originally posted by @Frank R.:

@Maurice Caulk

I'm a believer in using existing equity to finance yourself to the finish line.  The only thing I don't like is taking out a unsecured loan or second loan on your rehab property.

If you have primary residence with equity, get yourself in a position now prior to buying a property, get a line of credit a line you can use to operate with. 

Running out of cash is like drinking to much beer at the bar, you make very poor decisions.


Frank

 That is great advice Anderson your spot on with this one!!! I started to do a little more digging and thats the same answer ive been seeing. Thank you it's nice to know some people are actually out to help others and not just themselves!

Ps. I love beer quote lol

Originally posted by @Frank R.:

@Maurice Caulk

Have some of your personal capital for the project.  Borrowing money this early in the game for renovation expenses doesn't sound like a good plan.  


Frank

 While I can agree with the statement above, I purchased a home that needed A LOT of work. The seller destroyed the house, and we got the house cheap enough to where at the end of the renovation, we could have flipped the house for a $50k profit (on a $100k purchase). Instead, we chose to rent it out. 

Sometimes you have to look for the houses that no one wants, see the potential in them, and jump....especially now with the market flooded with investors.  :-)

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