Covington, GA · Member since 2014 · 295 posts · 93 votes
I have a family member that owns a small, dilapidated home on three acres of land. She wants to tear down the home to build a new one to serve as a rental property. I wanted to know if there were lending programs that will allow her to build/rebuild a new home for the purpose of renting, even if she has to reside in it for a year(as some loans do)? She is a veteran and the property is in a rural part of Georgia. Thanks in advance for any direction you can point me to.
Lender · Winlock, WA · Member since 2013 · 1k+ posts · 1k+ votes
7y
You will need to go with a fix n flip or construction loan based on the condition of the home. You wont be able to do traditional financing due to the condition? As far as equity, determine what the estimate land value is versus what is owed against it? The difference is the equity you have?
Lender · Winlock, WA · Member since 2013 · 1k+ posts · 1k+ votes
7y
I would go with a fix n flip loan, or a construction loan. The fix n flip loans are designed for rental properties or to be flipped. The equity that she has in the property now, will take the place of any down payment or LTV requirement. She should also be able to roll the closing costs into the loan, so basically sign for the loan and then get to work.
Covington, GA · Member since 2014 · 295 posts · 93 votes
7y
Thanks for the quick reply @Kevin Romines. I'm not sure there is much equity in the property as it is in bad shape and needs to be torn down. However, I do like the idea of possibly using the fix/flip and construction lenders as an option. It would really depend on the terms though. I was thinking of the loans that they give to people that want to reside in rural locations as well. Terms for those tend to be favorable. Thoughts?
Lender · Winlock, WA · Member since 2013 · 1k+ posts · 1k+ votes
7y
You will need to go with a fix n flip or construction loan based on the condition of the home. You wont be able to do traditional financing due to the condition? As far as equity, determine what the estimate land value is versus what is owed against it? The difference is the equity you have?
Lender · Miami Florida · Member since 2018 · 20 posts · 16 votes
7y
@Jay Dewberry - I agree with @Kevin Romines. Given the condition of the home, your best bet, is to go to a Private/Hard Money lender which depending on the investor can lend you ( max LTV based on experience usually) based on the ARV of the project you want to build and the comparable sales of the area for said type of property. They usually lend up to 75% of the projected ARV.