I am in the process of purchasing a multi family property. It's an all cash deal and will not carry a mortgage. I would like to do major renovations to the property and would like to fund the project with debt. A major bank already informed me that they would not give us a loan for a construction project.
Can anyone advise me on some options?
On one of the podcasts I heard about a 203k loan. Does anyone have any insight into this? Do I need an initial mortgage to qualify for the 203k loan?
Any advice would be greatly appreciated!
Hey Austin...for the 203k loan...that requires you to have an initial mortgage, as you said. That loan is for homeowners who want to "bundle" the home mortgage and the rehab loan into one package.
I don't have good direction for you regarding a good loan for the rehab. But hopefully the insight on the 203k loan was helpful.
Best of luck!
Adding to what @Brandon Reed said, 203k loans are not easy acquire. Even if you find a local bank that offers them, there's a bunch of hurdles they require and they only work with certain contractors. I would consider looking for hard money lenders, family, or HELOC if you have another property.
Good luck man!
Hello, I think I have some ideas that might help doing an equity loan would probably be your best best.
@Austin Johnson sorry I missed this post from a few days ago but I'd like to give some insight here:
A 203K loan is if you are occupying the property. Do you plan on occupying the property?
If you do plan on occupying the property then you should absolutely consider a conventional renovation loan. Significantly more flexible and they allow renovation loans on 2-4 unit properties...as long as you occupy them.
BUT if you don't plan on occupying the property then neither a 203k nor a conventional renovation loan will be approve you. You will need a different loan solution.
Bigger Pockets has state specific forums. I would suggest posting in one of those forums that you need a small bank renovation loan on a 2-4 unit property in X city and see if some locals can help out...if you aren't planning on occupying it. Good luck!
Sorry I missed everyones messages. Thanks for all of the responses! Right now I don't have plans to live in the property but that could change.