New investigator here! My wife and I recently purchased a 4 Plex earlier this year. The deal was so good we jumped on it and paid cash with the intention of finding a lender later to fund the rehab. We are now running into the issue where most lenders (hard and private) do not lend on rehab alone. They typically tell me that they only do loans where the purchase is included but since we already purchased the property, it’s outside their lending guidelines. Anyone have any advice on how to navigate this?
Hard money lenders, yes, you will likely continue to get that response. As to private money lenders, you make the rules between you so you just need to find the right private money lenders. I have a lot of lenders in my private investor network I have built over the years and many lend post acquisition and even in second trust deed positions.
Having the proper financials laid out for the potential investors should be beneficial to you. Show the existing value, rehab budget, requested loan amount, itemized budget of rehab, ARV, LTV (based on existing value), ARV based on future ARV, current cash flows, etc. If you own it free and clear, you should have no issues finding a private lender to fund your rehab.
Additionally, assuming you have owned this for at least 6 months (1 year better), you should also be able to find a conventional lender to do a cash out refi on it. Then use those proceeds to fund your rehab.
Thanks for the info, yes we own it free and clear however the property is currently vacant. We purchased the 4plex for very little cash ($23,500) and it needs a full rehab ($150k) which i have bids from contractors for the rehab as well as the ARV. Some lenders I've found have said it's a good deal but for my level of "experience" they couldn't lend because the rehab budget is too much.
Thank you for steering me in the right direction though with the type of lenders i need to pursue.