Renovation Loans in Detroit

Investor · Member since 2020 · 337 posts · 213 votes

Looking to get info if its possible to get a Renovation Loan in the Detroit area? For example: Say I find a property that is $30-40k and needs another $30k in work. After fixing it I would then like to rent it out and get tenants in place, and then refi to a conventional loan without doing any cash out. Is this at all possible? What are the rates usually on such loans?

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Michael Kinsella

Lender · Member since 2018 · 617 posts · 275 votes

Assuming the property will be non owner-occupied...

"Is this at all possible?"

If you choose to go the HML (hard money lender) route, then you may run into some loan minimum issues.

Many HMLs have loan minimums ranging from 50k-100k.

"What are the rates usually on such loans?"

Right now, a reasonable estimate is a low double-digits interest rate (say 11%-14% for example) with a few origination points (say 2%-3% for example).

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Kelsey Jurewicz
Lender · Fort Lauderdale, FL · Member since 2023 · 33 posts · 19 votes
3y
Quote from @Vadim F.:

Looking to get info if its possible to get a Renovation Loan in the Detroit area? For example: Say I find a property that is $30-40k and needs another $30k in work. After fixing it I would then like to rent it out and get tenants in place, and then refi to a conventional loan without doing any cash out. Is this at all possible? What are the rates usually on such loans?

Hi Vadim,
There is a conventional/FHA program called a '203k rehab loan' which allows you to purchase a property and wrap in ALL renovation costs INTO the mortgage, so in your example above, the total loan balance would be around $70,000.
Hopefully that helps answer your question.
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Marty JohnstonPro Member
Lender · Wauwatosa, WI · Member since 2016 · 571 posts · 204 votes
3y
@Vadim F. yes it is! If there ARV is more than 65% of the total loan amount, you could get a rehab loan for financing. Although loan amounts this small are going to be very limited to hard money lenders. Expect up to 15% on the rate and 5+ pts to the lender (you often run into minimum fees for example in this price point). This assumes you're looking at this as an investment property. If you are lookign to occupy the property as a primary, then you'd need to look at the conventional (Fannie HomeStlye Reno loan for example) or FHA (203k loan for example).

As for the takeout, again so long as the ARV is strong enough to support it, you have credit and income to qualify (if you go the Conventional DTI route as opposed to DSCR), you should be able to refinance into a long-term loan no problem.

Feel free to DM me if you'd like to chat more on this!
[email protected]414-600-0123
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Drew SygitBusiness Member
Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
3y
@Vadim F. it will be challenging to find funding for that small of a project in the City of Detroit.
[email protected]248-209-6824
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Michael Kinsella
Lender · Member since 2018 · 617 posts · 275 votes
3y
Assuming the property will be non owner-occupied...
"Is this at all possible?"
If you choose to go the HML (hard money lender) route, then you may run into some loan minimum issues.
Many HMLs have loan minimums ranging from 50k-100k.
"What are the rates usually on such loans?"
Right now, a reasonable estimate is a low double-digits interest rate (say 11%-14% for example) with a few origination points (say 2%-3% for example).
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Mike Klarman
Specialist · NJ · Member since 2022 · 1k+ posts · 652 votes
3y
The problem with these small deals is that there no money in it for the Lender or the investors who buy the payment streams.
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Sheree Dyer
Member since 2023 · 4 posts · 0 votes
3y
Quote from @Drew Sygit:

@Vadim F. it will be challenging to find funding for that small of a project in the City of Detroit.

Challenging…
But Possible?
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Sheree Dyer
Member since 2023 · 4 posts · 0 votes
3y
Quote from @Marty Johnston:

@Vadim F. yes it is! If there ARV is more than 65% of the total loan amount, you could get a rehab loan for financing. Although loan amounts this small are going to be very limited to hard money lenders. Expect up to 15% on the rate and 5+ pts to the lender (you often run into minimum fees for example in this price point). This assumes you're looking at this as an investment property. If you are lookign to occupy the property as a primary, then you'd need to look at the conventional (Fannie HomeStlye Reno loan for example) or FHA (203k loan for example).

As for the takeout, again so long as the ARV is strong enough to support it, you have credit and income to qualify (if you go the Conventional DTI route as opposed to DSCR), you should be able to refinance into a long-term loan no problem.

Feel free to DM me if you'd like to chat more on this!

Good Morning Marty! I am in a similar situation and could use some guidance. Can we chat?
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Sheree Dyer
Member since 2023 · 4 posts · 0 votes
3y
Quote from @Vadim F.:

Looking to get info if its possible to get a Renovation Loan in the Detroit area? For example: Say I find a property that is $30-40k and needs another $30k in work. After fixing it I would then like to rent it out and get tenants in place, and then refi to a conventional loan without doing any cash out. Is this at all possible? What are the rates usually on such loans?

Good Morning! Did you find any Helpful Loan info in the area?
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Marty JohnstonPro Member
Lender · Wauwatosa, WI · Member since 2016 · 571 posts · 204 votes
3y
Quote from @Sheree Dyer:

Quote from @Marty Johnston:

@Vadim F. yes it is! If there ARV is more than 65% of the total loan amount, you could get a rehab loan for financing. Although loan amounts this small are going to be very limited to hard money lenders. Expect up to 15% on the rate and 5+ pts to the lender (you often run into minimum fees for example in this price point). This assumes you're looking at this as an investment property. If you are lookign to occupy the property as a primary, then you'd need to look at the conventional (Fannie HomeStlye Reno loan for example) or FHA (203k loan for example).

As for the takeout, again so long as the ARV is strong enough to support it, you have credit and income to qualify (if you go the Conventional DTI route as opposed to DSCR), you should be able to refinance into a long-term loan no problem.

Feel free to DM me if you'd like to chat more on this!

Good Morning Marty! I am in a similar situation and could use some guidance. Can we chat?

Absolutely! Sending you a DM now.
[email protected]414-600-0123
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Vadim Shtil
Member since 2023 · 2 posts · 0 votes
3y
It certainly is possible to get an investment loan on a property like this, but it would be necessary to run the numbers to see what the after repair value is for the work that will be done to make sure that all of the numbers work. It is a small loan amount, but definitely possible.
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Sharon W. McMorris
Member since 2019 · 1 post · 0 votes
2y
Arv $70,000..... Already purchased, Need $20,000 for rehab
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