Rehab Only Lending For My First Investment!

6 Replies

Hello, all!

I’m a new investor and I’ve recently acquired my first property. Now, I need to secure a loan to fund the rehab. Can anyone advise me of the best options to me as a new investor? Any and all info is greatly appreciated?

Thanks,


Cory

@Cory Pruyn , more details.

What kind of property? Did you pay cash or finance? What kind of financing? What is your rehab budget? How do you plan to repay this rehab loan? Renting the property and paying down over years, selling it as a flip and paying it off, doing a refi?

@Kevin Sobilo

Hi, Kevin! This is a single family house that I plan to fix and flip. I paid $15,000 for the house and estimate the rehab at $75,000, with an estimated ARV of around $150,000. The issues I'm running into are a) I already purchased the house and b) it's my first flip.

@Cory Pruyn , you really jumped into the deep end. That is a significant rehab project!

If you had not bought the house already I might have suggested looking into a 203K loan. Those loans allow you to buy a distressed property and also finance the rehab costs.

If you only needed a more modest amount of cash to rehab, I might have suggested getting an unsecured personal loan from a local bank and using credit cards. However, I think most banks like to keep personal loans to a max of $25-30k assuming you have good credit and income.

So, for your situation I would suggest either looking at HMLs (Hard Money Lenders). There is a large list of them available here on Bigger Pockets. These are short term loans at very high interest rates, but they are geared toward exactly what you are doing. You may have to search hard to find one willing to lend to a newbie.

You might be wise to find a partner. Someone experienced in your area.

For example, you paid $15k for the property. Find an investor who will give you $5k for 33% of the deal. They will give you that cash, PLUS their name/experience to help you get the hard money loan you need. You will do all the work and get MOST of the benefits, but having someone experienced can help you get the loan you need PLUS provide you with some mentoring along the way.

What state?

Do you already have contractors lined up?

Do you have any construction experience?

Do you have cash reserves to get the project started and start making interest only payments on the loan?

@Michael Glist

Hi, Michael! I’m in PA. I have roughly $5,000 cash set aside to get started and am more than comfortable making interest payments. I already have a contractor ready to roll. My only real experience was fresh out of high school working with a local contractor on new construction, but have the means and know-how to complete many renovations myself. Hope this helps! Thanks for your response!

-Cory