Can a retiree obtain a renovation loan?

Question

My mother owns an investment property she would like to renovate here in NY but not sure if she can get the funds to do so. For context she is a recent divorcee who had to do a cash out refinance on her own home to satisfy the divorce decree. Not sure what impact that makes in this situation and her credibility in obtaining a new loan.

She owns a separate investment property that if she does some work to she can obtain the really high rent potential in this particular revitalizing Brooklyn neighborhood. The issue at had is that she now lives off her retirement and investment income. Is it possible for someone in her position to obtain a renovation loan for her investment property so she take advantage of the rent potential? Can we obtain a loan based on that concept which would ultimately be how we pay back the renovation loan?

What are the real options that can be taken here? How can I as her son help her make this happen?

I would like some real advice on how to move forward on this.

Thanks BP Community!

Paul Welden · Answer

@Walmsley Gedeon it’s time for you to talk with a mortgage professional.

Walmsley Gedeon · Answer

@Paul Welden sound advice.

Walmsley Gedeon · Answer

@Ahmed Saad @Paul Welden

After she adds me to the title. Can I take out the renovation load on her behalf or can she do it with me as a co-signer?

Please explain why or why not.

Thanks again,

Walmsley Gedeon · Answer

@Paul Welden thanks for the info Paul.

Ahmed Saad · Answer

She has to take it out bc she’s the only owner. You can do the leg work though.

Walmsley Gedeon · Answer

@Ahmed Saad it just needs a cosmetic upgrade. $100k or less on renovations. 3-Fam... 3bed rooms.

Can I take out a loan for her?

Ahmed Saad · Answer

@Walmsley Gedeon, yes you can tap into the equity in order to renovate. Again, be careful with the numbers. You do not want to over leverage. You also don’t want to over-renovate to the point you reduce the ROI due to extensive renovation costs. In short, get the most bang for your buck.

How many units in the investment property? What neighbourhood?

Paul Welden · Answer

With $1M in equity on the investment property, she could do a cash out refi to get access to cash.

If you want to be on title, she could just add you to it ... very simple.

If there is a Mortgsge on the property, I do NOT know any way that you can  “take the property over” without involving the banks.

Walmsley Gedeon · Answer

@Ahmed Saad Yes she still has a loan on the investment but she has close to a million in equity. I was hoping that could work in her favor.

Is there a way for me to co-sign perhaps?

Or how can I take the property over without involving the banks. Then I can take out a loan and I can still give her the rental income.

Do you know if that is possible without me putting money into the loan process?

Please educate me anyone?

Thanks!

Paul Welden · Answer

As long as your mom's income and credit can support the debt (i.e. mortgage), it doesn't matter if she is retired or working, and she could qualify for a mortgage loan, even a renovation loan such as the FHA 203k (primary residence only), Fannie Mae Homestyle, or the Freddie Mac CHOICERenovation.

Can a retiree obtain a renovation loan?

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