Financing rehab costs on a triplex

[Brendan Chase]

Looking for advice on funding a rehab for a triplex. Purchase is 200k and rehab estimate is 75k. I have apprx. 80k of my own money. My understanding is banks will not finance a rehab? This is an investment property and I do not qualify for FHA and the like.

[Andrew Postell]

@Brendan Chase who told you banks won't finance rehabs?  That is 100% false.  But even if a bank would not, you still have other options.  In the investing world the purchase price is important.  The repair budget is important.  But also the AFTER REPAIR VALUE (ARV) is important. So if the triplex you have identified has an ARV of $450,000, then you are purchasing and rehabing at less than 75% of the ARV. This is important because many Hard Money Lenders (HML) will lend up to 75% of the value of the property. I'm not sure why you wouldn't qualify for "FHA and the like" but let's assume for a minute that it's a credit issue....some Hard Money Lenders don't even check credit. HOWEVER, you will need an "exit strategy"....meaning how you get out of their loan.  Since their loan is a temporary loan, you need to either pay off the loan (refinancing is the most common method) or sell the property (aka flipping).  But if your property is good, you will find lending.  Hope this helps!