Rental Property Investor · Chicago, IL · Member since 2019 · 18 posts · 4 votes
Can someone share how the process goes after finding a deal that you are ready to buy. I know that no one experience is the same, yet I want to try to generalize what can be expected with real estate transactions.
1)How did the process go finding a lender? Was this done before or after contacting and beginning the transaction with the seller?
2)How did the transaction process work?
3)Did lenders supply a loan for rehab to take place or was this something saved for?
4)How long until the loan from lenders are allowed to be utilized?
Start talking to lenders to see who you want to work with and to confirm what you qualify for. The only way you can borrow money to purchase and rehab is to use a a 203K lender. The second option is to use a private lender or hard money lender. I prefer private lenders. If your using the BRRRR strategy you will need to loans. I do the buy side while the other on the refi side.
I use private lenders, they will fund the purchase and rehab. I pay them back at the refi. No monthly payments. It took a while to earn there trust to get this type of lending. My first project, they paid the purchase while I paid for the rehab. After that they funded 100%. All funds were received at closing on the buy side. Funds were sent to the title company from the lender and a check is cut back to me for the rehab. It is all done at the closing.
Investor · Boulder, CO · Member since 2016 · 1k+ posts · 1k+ votes
6y
@Sienna I would shop for a lender now even if you don't have a deal. Find someone who has program you want, good process and team, and can close. You can then ask about their particular process (you'll find most lenders are similar) Personally, I would ask for recommendation for other investors for this. Build that relationship now, that way when you have a property, you can pull the trigger.
As far as funding the rehab, you would be working with a hard money lender or private lender to get a fix/flip loan, and then refinance out into a conventional loan (or commercial when they are back on line). Again, each lender will be different in their down payment and what they will cover as part of the rehab so ask around. And, shop BOTH the fix/flip loan and the conventional loan now. You don't want to find out after your rehab that you don't qualify for the conventional loan.
As far as your last question, that mainly refers to a line of credit and again differs lender to lender. For commercial credit, most lines are renewed annually. I think what you are asking about, that doesn't apply since you want to get a loan for the purchase and rehab, and a lender will want to see your timeline to get that done quickly. Besides, that type of money is expensive so you will want to get it done quickly too!