What's the best way to secure $100k for a build or rehab in South
I want to use as much loan as I can deploy.
I'm estimating $100k for material & labor for down payment for a build but less for a rehab. I do have access to equity. My home is worth $247k and I paid it off at $135k. I have access to a 401k and/or a gift of $30-50k. How much would I need access to in order to borrow $100k to build or rehab? What's the best type of loan product for this, to have a low monthly payback? Also, if I got a HELOC or cash out refi, would I be paying back two things at once?
Go easy, I'm new to RE but want to invest but want to wisely obtain funding. Thanks for your seasoned input and for interpreting and responding to the question that I may not even have asked.
Michelle
One option you might not have considered is hard money (personal money) lenders. There are plenty of people who recommend not using your own money at all if at all possible and just using hard money instead. It can make a lot of sense, especially if you want a second pair of eyes on any deal you are looking at.
@Michelle Boyd a couple of clarification questions, are you planning to make the new build your primary home or as an investment property? This can affect what type loans you are trying to get. Second, if you are thinking a new build, this entails things like a construction loan that eventually becomes a full standard mortgage. This would require a carry of interest and costs for 6+ months before you even move in. With interest rates climbing, Is this also an option you would want? Third, if you are considering not moving, doing a new build for an investment property can be a cash negative flow unless you are getting one heck of a deal on the land. Is a cash flow positive situation important to you?
Thank you
...are you planning to make the new build your primary home or as an investment property?
AN INVESTMENT PROPERTY.
...if you are considering not moving, doing a new build for an investment property can be a cash negative flow unless you are getting one heck of a deal on the land.
MAYBE A REHAB COULD AVOID A CASH NEGATIVE SITUATION?
Is a cash flow positive situation important to you? YES.
Thank you for your response. I really appreciate it.
@Michelle Boyd you have several options as it seems you are acquiring an investment property. A BRRRR is an option if you are willing to put in sweat work towards your investment. Keep in mind you should probably find a good contractor to help you plan your costs and look around at comps to figure your ARV. Being as close as possible on cost vs resale matters (aka a house flip). There are lenders out there who will 100% finance a rehab and offer up to 80% LTV if you choose to refinance instead and simply take out equity. Another option is to look at a DSCR loan, interest rates are higher and a credit score >690 is important, but if the 20-25% down payment you put calculates to a cash flow positive situation, you can get the rest of the money as a loan and after 6 months, apply for a refinance if interest rates are better. Incidentally, I have learned all of this stuff from the BP forums and it is readily available if you look at the how to's. Also, a lender/broker can walk you through the steps as well. Best of luck for whatever endeavor you choose!
Here is a simple online calculator to help assess situations:
Hi Michelle,
One option might work is to get unsecured funding that can be used for down payment or outright purchase funding. It's out there and available from lenders who don't have as strict criteria as conventional banks.
Be happy to connect.
Best,
Dave