Financing a Value-Add Deal

[Michael Czepil]

Hi everyone, I'm looking to buy a fourplex as an owner-occupied here in the next few months and I have a question regarding financing. And my question is, how would you fund the value-add part of the deal?? For example, if I were to find a property for 125k and it need say 25k to paint, lay some new carpet, add a washer and dryer etc., how would you raise that 25k? Assuming I would put 25k down and take a loan for 100k, would the value-add 25k came from savings? Would you take out another loan? Could you somehow work it in with the first mortgage? Thanks guys, looking forward to the feedback.

[Jon Holdman]

You might look into the FHA 203K renovation loan program. That's a way to get a loan that includes some rehab money.

You should look into FHA in general. With an OO property, you should be able to get a lower down payment than 20%. So, you could use some of your cash to fund the rehab.

Other ideas:

Credit cards
Borrow against a 401k
Borrow against another property
Friends and family
Sell some stuff.
Fix it up slowly and pay as you go