20k for rehab, where to get funding?

4 Replies

Hello everyone,

Please share any ideas you have to help with the problem below:

I have found a retired couple who own, free and clear, a second house in Houston, Texas they would like to use as a rental property. The house needs a rehab that would cost around 20k. They do not have the funds and the bank will not loan on an unoccupied home that I am aware. The house's ARV is 90k and they own it free and clear. There is a lot of equity in the home. Is there a private lender willing to loan that amount of money for first lien position?

Thanks for your support and help.

Kind regards,

Andrea

@Andrea Lizcano Summers ,

Banks will lend on unoccupied, investment properties.  You just have to find the right bank.  I secured a loan against my vacant rental property in order to finish up the rehab on it.  I owned it free and clear as well.

You're more likely to get better results from a small community bank than from any of the large banks. I got my loan from a small community bank in the form of a small business loan. I didn't have an LLC, or any other type of corporate entity. I just explained to the bank what I was trying to do, and asked if they had any line of credit products that they could provide me with.

The only thing that you don't mention is the income of the couple.  In my case, I have a good income from a full-time job and therefore easily qualified for the line of credit.  If they don't have ANY income it might be hard to convince a bank to lend.  If they have SOME type of income (social security, pension, etc) then it will definitely be easier to find funding.

The line of credit is probably going to be your least expensive source of funding.  Next would be private money, and then hard money.

I hope this helps, let me know how you make out in helping out this couple.

Dido what Joshua just posted.  I had to show a property management contract proving that it is a rental.  It was vacant and under rehab, but I quickly put it under a rental contract with a PM.  If I didn't have that, I couldn't get a loan through the bank I was using.  Plus, I had to have held the property for 6 months. 

There are definitely portfolio lenders out there that have different qualifying standards compared to the traditional banks.  You can try and locate a "Portfolio Lender" in your area.  This is typically a small town bank...

Can they use credit cards? Maybe they can get a personal line of credit at their bank.

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