Investor · Washington, DC · Member since 2014 · 81 posts · 47 votes
Hi BP members.
I just purchased a SF investment property in DC. My plan is to completely gut the house and have everything new - electrical, mechanical, etc. Will a hard money lender finance for rehab only? I know they typically lend for a 6 month period, so I plan to pay for all the drawings and permits myself since those can take a lot of time. Then once I have the required permits, I would like to use hard money to finance the rest of the renovation.
Buy and Hold Investor · Knoxville, TN · Member since 2013 · 450 posts · 270 votes
10y
It's a little late to be thinking about this, don't you think? I assume you have a first mortgage or did you purchase it with cash? You may be able to find one who will do it. If they have to be in 2nd place, then you will have more trouble, and maybe they will want more points and higher interest rate. Is there anyone you could bring in as a partner to bring the money for the rehab for half the profit?
Buy and Hold Investor · Knoxville, TN · Member since 2013 · 450 posts · 270 votes
10y
It's a little late to be thinking about this, don't you think? I assume you have a first mortgage or did you purchase it with cash? You may be able to find one who will do it. If they have to be in 2nd place, then you will have more trouble, and maybe they will want more points and higher interest rate. Is there anyone you could bring in as a partner to bring the money for the rehab for half the profit?
Lender · Dayton, OH · Member since 2008 · 1k+ posts · 705 votes
10y
The typical hard money lender wants their mortgage in first position. If you paid cash for the property, then the answer is "yes". Otherwise, you'll have to get a hard money loan that pays off the first and provides enough funds for rehab. For the size of you project, I'd make sure you get a 9-12 month hard money loan. 6 months won't be long enough.
Investor · Washington, DC · Member since 2014 · 81 posts · 47 votes
10y
@Chris Eaker. BP is a forum for guidance, not one where people seek to be chastised. An experienced investor may have considered this from the beginning. However, since I am still learning as I go, it is not a question I thought to ask until now. I can pay for the reno on my own, but I want to consider my other options as well. Thanks for your input.
Real Estate Investor · Richmond, VA · Member since 2016 · 133 posts · 31 votes
10y
@Cynthia Hartley Congrats on getting started in real estate investing. I understand your question. I would agree with @Darrin Carey, as I recently had a deal where the owner was willing to do owner finance during the reno and I was looking to only have the rehab financed (to save money on fees, etc). There were hard money companies that said "yes" however as Darrin stated they each wanted to make sure that they would have 1st position and that the owner owned the home free/clear. Otherwise I would need to take out enough funds for the purchase and rehab. Wish you well and hope this helps! Take care!