Updated almost 3 years ago on . Most recent reply
LOC for Rehab needed only
Hey, BiggerPockets! I'm Jose and I've been wholesaling for almost 2 years. Recently I've been working to get all my ducks in a row to start BRRRRing SFH here in Central FL. Everything is already good to go (the refi, the rent strategy, and the GC) except for the first piece of the puzzle: the Buy. I am a real estate investor full time and the last time I worked in a W2 job was on May 2022. So my only income at the moment is my wholesale business. I currently have around $25k liquid and holding onto as much as I can in case it's needed to be approved for any type of LOC.
Yesterday, I did a PML pitch to a long-term experienced investor and he agreed to fund 100% of the purchase but I need to come up with 100% of the rehab. So I want to use a LOC for the Rehab portion only. The LOC will help me for maximum scalability and not decapitalize my own funds in case of emergencies such as going over the rehab budget or getting approved for a LOC. I have some options in mind that I'll explain below of my situation and I wanted some help to see how I can get access to these.
HELOC
- I have a condo in Orlando that is under my personal name and it's owned free and clear. I would love to get a HELOC on it but when calling around to lenders, they all tell me that my LLC (wholesale business) needs to be at least 2 years in age. It will be 2 years in August 2023. This condo is worth around $190k so I could get a HELOC of around $130k which would be perfect! Are there any lenders that you know that might help me with this?
Business LOC
- Is there any business Line of Credit that I'm able to use for the rehab portion only?
Any other options
- I'm open to hearing any other options that can help me to fund the rehab portions of the SFH BRRRRs that I'll be doing. The rehab would be around $30k-40k for every project (estimated).
- I'm going to continue calling around lenders but I thought I ask BiggerPockets as you guys are always so helpful!
Thank you for reading all this! Thank you in advance for any comments and suggestions!
Most Popular Reply
Hey Jose!
Depending on your PML cost it might be worth it to look into a hard money lender for the rehab costs as well. Most of the time even using hard money on this stuff will still require 25% down. Depending on your strategy and how you buy there are options for financing the rehab into the loan. the other thing is maybe see if you can get a DSCR loan for the purchase and use the PML for the rehab portion. If you have an LLC you can go get an EIN and then open a bank account and get a LOC, it might not be for the amount you want but that's a great way to establish credit under your LLC and eventually get the LOC to be large enough for your needs.
As for the HELOC they can be expensive but my husband is a lender and can help you with that or simply doing a refi of some sort to be able to access the equity. I will send you his info. Also, we would love to get on your buyers list! Hope this helps.