Charlotte, NC · Member since 2011 · 107 posts · 13 votes
So, I know about the home path renovation loan 10% down for investors. Obviously this is limited to only certain properties. Are there other conventional financing options for financing properties that need repairs? Or am I limited to cash, or hard money?
Investor · Dallas, TX · Member since 2014 · 2k+ posts · 1k+ votes
12y
@Steve Babiak is correct. Your local, portfolio lenders will have a lot more options for you. FHA insured loans can have some really strange requirements attached to them...sometimes randomly. When I purchased my first home, which I was going to occupy, they wouldn't close on the deal, until I put a stove in the house. They weren't concerned about missing light fixtures with exposed wires, but I had to install a stove, before we could close. They also required me to paint. Really? Weird.
Anyway, portfolio lenders have their own underwriting standards. They can make loans on properties the FHA won't give a mortgage against. Also, if your deal is good enough, you can get into the property with equity built in, which can reduce the amount you have to bring to closing as a down payment.
I am not aware of any conventional financing rehab loan programs that are investor friendly. I'm currently using private and hard money lenders for most of my investments. Do you have access to these lenders or is their money way too expensive for what you are looking to do?
Charlotte, NC · Member since 2011 · 107 posts · 13 votes
12y
yeah, I'm aware of hard money and I have a few potential sources of private money. It just seems more risky and more expensive to me.
How do you structrure your private money deals? I'm guessing you give them the first lien, and what are the rates like? And do you hold them with private financing long term or refi conventional?
If I did either a hard money or private money deal, I would want to refinance conventional as soon as I could because I have good credit and room in my DTI.
Homeowner · Pittsburgh, PA · Member since 2014 · 854 posts · 511 votes
12y
I was researching the same thing yesterday and came across the Fannie Mae HomeStyle Renovation Mortgage. It doesn't have to be owner occupied. It looks like a pretty good option to me, but I am still doing research.
Investor · Dallas, TX · Member since 2014 · 2k+ posts · 1k+ votes
12y
@Steve Babiak is correct. Your local, portfolio lenders will have a lot more options for you. FHA insured loans can have some really strange requirements attached to them...sometimes randomly. When I purchased my first home, which I was going to occupy, they wouldn't close on the deal, until I put a stove in the house. They weren't concerned about missing light fixtures with exposed wires, but I had to install a stove, before we could close. They also required me to paint. Really? Weird.
Anyway, portfolio lenders have their own underwriting standards. They can make loans on properties the FHA won't give a mortgage against. Also, if your deal is good enough, you can get into the property with equity built in, which can reduce the amount you have to bring to closing as a down payment.