Rehabbing Multifamily where can I borrow funds.

13 Replies

Hello again BP, I just bought a Quadraplex and I have some funds to renovate but I need some more to finish all at one time. Family and friends is not an option for me. Which company or bank do you use to get funds to renovate a property that I intend to hold? Is there any such thing out there?

Do you have any equity in the property you could tap into?  Are any of the units rented?

You might just have to start going to all your local banks and see if anyone will loan to you.  It will look a lot better if you put together some type of portfolio with your multifamily in it.  The bigger pockets rental calculator with pictures, expenses, etc does a pretty good job for a start.  Any bank would be able to look through that and get all the information they need on the property.

You will have a really tough time if none of the units are rented.  After all they want to be sure they get paid.

@Account Closed what about 0% interest credit cards? I would only do this if you have a good ability to pay off before the 0% period expires, but you could always use for rehab then refinance and pay off.

Also look at personal loans from companies like sofi or discover.

Account Closed  I recently got instant approvals with Discover and Barclays Bank with good size credit lines at 0% for 15 months, so those could be options for you to finish the rehab.  Also got instant approvals with Cap One and AMEX, but those didn't offer intro rates.

Hope that helps.

@Tom S. I’ve done some rehabs on CC. It’s def an option. I’ve done it and made a lot of money a few times. But I did learn something that should be pretty obvious.....my middle name is oblivious.

So here it is. My laymen’s experience. I’m not credit expert so hopefully someone sees Experian, trans union etc and checks in here with helpful info.

Credit rating agencies use some sort of calcs to rate your credit. When you get over 30/50% on an individual card or across your whole Revolving credit profile that will have an affect on your credit.

Applying for several cards at once will also have an affect.

So if your planning to use cc to fund Reno’s plan way ahead, get the cards. Use them to pay for every expense you can. 

keep the cards below 30% as long as you can...and be prepared for the cc companies to slash your limits when they see what you going over 50% and not paying it off like you had been   

If you get your limits lowered don’t plan on taking any new credit for a while.

So if I was doing it again I would use the cards monthly, pay them down with cash month after month....they see that they’ll raise your limits.

And when I know ill need them use the max amount i plan to use in the same month.

then finish out with the rest of my cash. Timing wise i would want to take advantage of the teaser rates and pay then down when i refi/sell.

Just keep in mind if you refi those high cc balances will be looked at and it might be something that will raise your rate on your mortgage....it could even be the cause of you not getting approved   

I’ve done it. Don’t recommend it but everyone makes their decisions. If your using this strategy to flip it’s risky   If your using it for buy and hold its more risky if the CC are in your personal name. So if that’s your thing make sure you have reserves to cover expenses plus all the cc

Once you’ve been around for a while try getting a business loan based on revenues

They won’t show on your credit so it takes some pressure of your score

@John Hickey

Excellent advice! That is why I am hesitant to suggest credit cards with 0% interest. They can be great, but hurt, just as you mentioned. I hope all is well with you!

Originally posted by @Account Closed :

Hello again BP, I just bought a Quadraplex and I have some funds to renovate but I need some more to finish all at one time. Family and friends is not an option for me. Which company or bank do you use to get funds to renovate a property that I intend to hold? Is there any such thing out there?

You should check lima one capital, I know they loans of that type. 
You could also go to a bank and get a personal line of credit. The interest rate will be a lot cheaper!  

@Jerry Padilla yeah I def agree with that. I’ve done it as a last resort. But if I had planned ahead a bit better I could have avoided it.

If you do need some credit.... I would speak with Jerry. I did a deal with him in 2015 and it went very well. Jerry’s a good guy.

Lowes business  credit card is pretty easy to get, but it is only for materials and the interest rate is very high.  

Account Closed you may be able to work with a hard money lender. Or a lender that can service you a short term bridge loan product. I would seek out local REIAs in your area to network with other investors who may have the resources or contacts you're looking for. Good luck

@Account Closed   Absolutely agree with you regarding using CC's and their effect on credit scores.  Just suggesting it as a possible option to the OP, especially if the amount needed is small and needed immediately, like $10-15k.

Personally I always use small local banks that provide purchase + rehab financing all in one loan.  It's takes the guess work or stress out of having to refi as soon as the rehab is done.  Plus only one set of closing costs.

Mine are done through the commercial lending departments of the banks and they hold the loan in-house.  No points, 5-6% interest, 20 year term, and they don't report on my personal credit.

- Tom

@Tom S. Don’t get me wrong I wasn’t trying to chime in on being wiser and not using CC. I still do.

What I wanted to do is point out to game the system that they use so you don’t get hurt.

What your saying about local banks is great. I’m going to look into that myself. Thanks to point that out to me.

Check out this below and tell me what you think of this if you don’t mind.

 My cc debt was 17,677 reported last month.  Truth is they were wrong it was higher.  I paid them all off this weekend. I paid off a few earlier in the month but now they are all 0

But look what it gets me in the projections off the the experian website.  Three scenarios.  Paybit all off...my credit will go up 30-40 points   If I carried the balance for 2 years and paid 734 and  all that interest then I would obtain 840 “exceptional credit” so or even pay 500 a month and still be at 804!!   While paying 17-24% on 17k  I’m exceptional?  Exceptionally stupid!!!! 

Unless that investment that I used it on is returning exponential returns...which it did not   Great returns but not exponential it’s stupid to carry balances...imo

Sounds like they have set up the system to reward high risk borrowing   Which is a biz decision they make   So that they make more money   

Juts know the rules of the game when you play   

But I still do use CC it if I have to....anyway I'm going to take your advice and check into LOC from the local