I have inherited a property in Dallas, Tx. This property has a tax lien of $10 k and is in pretty bad shape. I need to rehab this property to be able to do anything with it. I have no dept and my credit is really good. I just have no clue on what type of loan I should get to rehab the home. I read about hard money and private lenders but don't know if I should seek their services or deal with another source. I am really careful with not getting credit cards but I know I need to get a loan of some sort to get this project going. Any advise would be appreciated. And I would like to rehab the home pull out equity and rent it out. Its a good investment to get me going into this new venture. I am new to BP and in just a few hrs have absorbed so much information. Truly grateful to be apart of this community.
Hard money would allow you to borrow the most. But if the unrepaired value is sufficient you could do a simple HELOC. That could save you lots of finance charges. Then after it is repaired you can rent it and do a cash out refi based on the appraised value (should be close to ARV if you do the comps right) - if you want to get some cash for more deals while also having cash flow. Or you can just rent it and enjoy the cash flow.
Thanks for the advise Doug, Its great to get some insight rather than just try and figure things out on your own. Greatly appreciated.
I think you have a few possible options.
One is to get one if those loans unique to Texas that permits you to pay the back property taxes.
Hard money is primarily based on equity but is typically suitable if you occupy property at the time of funding.
If the property has substantial deferred maintenance, you may be unable to get any other kind of financing until it meets certain criteria. FHA will most likely have some restrictions however they do offer the 203K programs (I think they're still offered) which are intended to be used for property renovation.
If there's no time pressure, continue doing all the investigation you can and remember that it may be necessary to do several loans in succession in order to end up with a fully renovated property and long term bank financing.