Private Lending & Conventional Mortgage Advice

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LENDERS & MORTGAGE BROKERS

Posted Jul 28 2022, 16:39

Looking for a loan product that will finance the mortage and rehab for a 2-4 multi-family property. This will be a buy and hold investment property not a flip. Does such loan product exist? 

Houston, Texas

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Miranda Holland
  • Lender
  • Cortland, NY
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Miranda Holland
  • Lender
  • Cortland, NY
Replied Jul 28 2022, 16:55

Yes there are loan products that cover buy and hold with little to no rehab.  Many private lending companies offer short term loans as well as long term loans amortized over 30 years

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Eliott Elias
  • Realtor
  • Austin, TX
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Eliott Elias
  • Realtor
  • Austin, TX
Replied Jul 28 2022, 21:41

Shoot me a DM, happy to share my contacts 

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Jack Mawer
  • Lender
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Jack Mawer
  • Lender
Replied Jul 29 2022, 07:11

Lashanda, I would recommend a DSCR loan!

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Brittany Minocchi
  • Lender
  • Massillon, OH
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Brittany Minocchi
  • Lender
  • Massillon, OH
Replied Jul 29 2022, 07:35

You could start out with a short term rehab loan, and refinance into a DSCR loan if DTI is a concern. This type of loan is based on the income generated by the property.

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Issac San Miguel
  • Lender
  • Austin Texas
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Issac San Miguel
  • Lender
  • Austin Texas
Replied Jul 29 2022, 07:36

DSCR wouldn't work with a buy and rehab.

This is a fix and flip that will refi into a buy and hold.

Good Luck!

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Melvin List
  • Lender
  • Tampa, FL
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Melvin List
  • Lender
  • Tampa, FL
Replied Jul 29 2022, 08:16

@Lashanda Gray Yes typically 90% of the purchase price and 100% of the rehab

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Jonathan Taylor
  • Lender
  • Los Angeles, CA
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Jonathan Taylor
  • Lender
  • Los Angeles, CA
Replied Jul 29 2022, 10:01

@Lashanda Gray these loan programs are called fix and flip financing but long term investors use this product. The strategy is split in two loans. First loan is for the acquisition and rehab of the property. Second loan is a refinance into a long term 30 yr loan.

Percentages vary by experience but lenders come to the table with 70% of the ARV or 85% LTC whichever is less. 100% of the rehab is covered and the reaming amount goes towards the purchase loan. DM with questions but I have both been through this loan as an investor and originated these as a broker.

Lender CA (#02115256) and NMLS (#1993906)

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Kevin Woodard
  • Lender
  • Nationwide
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Kevin Woodard
  • Lender
  • Nationwide
Replied Jul 29 2022, 12:39

If your goal is to rehab a property, increase value, pull a substantial amount of your capital out, then rent it. You’ll want to break up financing in two parts as previously mentioned. 

There are financing options that have 30 year terms and include rehab in the financing. However that is the exception and not the rule. The down side to this is pulling equity out post-construction, but it works in certain occasions. 

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Joseph Crawford
  • Lender
  • Philadelphia, PA
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Joseph Crawford
  • Lender
  • Philadelphia, PA
Replied Jul 29 2022, 15:18

@Lashanda Gray sure. Under 5 units qualifies for a morgage.

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JJ Lunsford
  • Investor
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JJ Lunsford
  • Investor
Replied Jul 29 2022, 18:19

Lashanda, we help with this all the time. I'll shoot you a message :)