Hey all! I am new to investing in rental properties and have a goal of acquiring my first Multi-Fam in 2020. There is a TriPlex I am interested in pursuing after running the numbers. I want to finance my first deal and the seller is good with accepting offers from buyers that will be financing. After taking a look at it, the roof is going to need repair for it to pass appraisal. Does anyone have any ideas on how to get financing on properties that need repairs to get a loan? FHA 203K is not an option as I will not be living in this. Thanks in advance!

Talk to some local banks and see if they'd be willing to help. I've done multiple projects with a local bank that did 80% loan-to-purchase on distressed property. I typically would raise the rest of the money for the rehab through personal connections or use my own money. In one instance, I took out an unsecured personal loan to cover the difference.
If that doesn't work, you could go hard money and use a lender like Lima One - there are others out there. They have programs where you can roll in the renovation. I have worked with clients that were able to get 90% loan-to-cost. The properties purchased and financed using Lima One were heavily distressed.
If you don't want to pay higher interest rates and points, you could go the private money route and try to work with your network to raise the money to get it done.

@Joseph Bernal   Exactly as David mentioned above.  Smaller, local banks that provide purchase + rehab financing.  I've done all of my last deals this way.

Originally posted by @Joseph Bernal :

Hey all! I am new to investing in rental properties and have a goal of acquiring my first Multi-Fam in 2020. There is a TriPlex I am interested in pursuing after running the numbers. I want to finance my first deal and the seller is good with accepting offers from buyers that will be financing. After taking a look at it, the roof is going to need repair for it to pass appraisal. Does anyone have any ideas on how to get financing on properties that need repairs to get a loan? FHA 203K is not an option as I will not be living in this. Thanks in advance!

If a local bank doesn't help you, there are numerous brokers out there willing to lend on a distressed property and then, once the property is stabilized, do long term financing on it; all with no income verification and no prior track record.

Best of luck

Stephanie

@Joseph Bernal you certainly have some good suggestions above but this is also a type of property that Hard Money could be used on. Admittedly, Hard Money is higher in cost but they can close quickly and can lend on the ARV. So if you could buy and rehab at 70% of the ARV...then you could come out of pocket $0 in theory. Those deals are harder to find but it's entirely possible. This one almost sounds like it's "for sale by owner"? If so, please make sure you are buying and rehabbing with equity left in the deal. So if you need 15% down....then you should be having 25% equity if you are rehabbing. Otherwise, just buy a property off the MLS that doesn't need any rehab. I hope all of this makes sense.

@Joseph Bernal Hi Joseph, this is not uncommon. There’s a few options on how the Bank could do this; but a Loan for an acquisition + improvements is not an issue at all. The most important items are the cash flow of the subject property (net income should cover the debt service), your global cash flow, and your personal financial strength. Anyways, Where is the property located? If it’s outside of my market I’m still happy to go over what your options are. Let’s connect and shoot me a private message with the some info and I’ll get back to you with answers. Thanks.