Loans Mid Renovations

[John Friendas]

What are the lowest cost loans mid-renovations? My DTI is getting up there as I own two properties now: 1 being rennovated and 1 rented out for 7 months. Both in Ohio.

The property I bought for 150k and it appraised for 350k when I purchased it. The zoning is a bit weird as to whether it is a duplex or quadplex. Now I am trying to get it fixed and rented out but with all of the renovations I am running out of money and needing extra funds to complete the project. I am making sure to budget better now.

[Doug Smith]

Mid-renovation is a different animal, but we've done many of them. I think there are 3 real keys to getting them done. First, what is the experience level of the operator. The more experience someone has, the more aggressive a lender will tend to be. Second, what is the battle plan. If the operator is flailing away with no viable plan or exit strategy, good lenders are going to shy away. Third, what's the "fall-back"? Does the operator have the ability and/or liquidity to get out of it if needed. What it appraised for when you bought it isn't as relevant as people think. Most of us lenders are concerned with Loan-to-Cost and As-Completed-Value (like ARV in flips). If we can understand those factors better, we might be able to provide you with more solid advice. I hope we all can help you.