Updated 3 months ago on . Most recent reply
Best Loan Product for Renovation for Rental
Situation: I have a 3/3 townhome located in South Florida that is paid off and owned by family member. The purpose for this property will be to supplement their long term care. I'm estimating around $75K for the renovation. If it were to sell today it would probably sell for the $300-330K range.
What would be the best loan product to get this done. Feel free to call out the pros/cons of each. Maybe this is pretty simple answer but I always appreciate the depth of knowledge of BiggerPockets! Thanks much in advance.
Most Popular Reply
Hopefully you got an answer on this by now on another forum, but you'd have a couple options here.
Since you have the equity to take out, i would certainly be looking at just doing a simple cash-out loan. whether thats a full-doc (qualifying with income) or a DSCR cash-out (using the cash-flow from the rental to qualify)... this would give you long term debt (30 year fixed) and likely be the most efficient answer.
there are fix and flip loans out there, but that doesnt seem like it would fit your needs on this scenario... unless you intend to renovate the property and then quickly pay off the $75k you borrowed. F&F/ reno lending typically does not have a prepayment penalty.