Looking for Rehab/Renovation Loan Suggestions
Real Estate Agent · CA · Member since 2025 · 5 posts · 1 vote
Hello everyone. I recently purchased an historic 1845 farmhouse that needs a full gut rehab. Is this something that a private lender would be interested in or would I need a hard money loan to complete the project? I plan to make it an Airbnb/Small Wedding-Event Venue. It sits on 2 beautiful acres, but the house is in grave condition and needs lots of repairs. It is registered in Mississippi as a Historical home. I reside in Woodville Mississippi and so far, no lenders or appraisers understand the scope or uniqueness of this property, and I have been unable to get a loan. Any suggestions or recommendations will help. Thanks, Adrienne/😊
Hi @Adrienne Hardy, congrats on your recent purchase!
Unless you have already successfully performed a full gut rehab on a similar property, and made money doing so, you'll have a very difficult time getting funding.
To any lender, the scenario your describing looks like an enormous risk sandwich, with a side order of potential disaster.
Your best bet will be to convince friends and family who already know and love you to lend you the money.
Hi @Adrienne Hardy, congrats on your recent purchase!
Unless you have already successfully performed a full gut rehab on a similar property, and made money doing so, you'll have a very difficult time getting funding.
To any lender, the scenario your describing looks like an enormous risk sandwich, with a side order of potential disaster.
Your best bet will be to convince friends and family who already know and love you to lend you the money.
Thanks Mitch for your honest evaluation of this situation. Not happy about it but at least it shows me where I need to start.😊
Thanks Mitch for your honest evaluation of this situation. Not happy about it but at least it shows me where I need to start.😊
Happy to help!
Is there a local MS investor with a track record in this specific type niche who you can approach?
If you brought the property and they contributed their expertise, perhaps you could use a joint-venture structure to get this funded?
In an ideal world I would love for this to happen, however I have not been able to connect with anyone. Trust me I have tried. 😊 I couldn't even get an appraiser to give me a clear idea of the value because of the uniqueness of the property and its use. I've tried to connect with banks who unfortunately don't even know what a Fannie Mae Homestyle Renovation loan, less known access to private money lenders or hard money loans. Nevertheless I will keep researching until something GOOD happens that makes sense for the restoration of this beautiful property. I will never give up. 😊 Thanks for your advice.
Full gut rehabs are the bread and butter for most private/hard money lenders, @Adrienne Hardy, and not reason for any lender to ignore your call. It sounds like you need a better process to find a lender.
You might check out the member directory at the AAPL, the largest nationwide organization of private lenders. (Full disclosure: we are members, but we do not lend in Mississippi.) Also, call the organizer of some local real estate clubs found on Meetup.com for references. Before you do this, however, understand what you are getting into.
Historic homes are extremely challenging and can be a nightmare. We’ve loaned on several and will never loan on a historic home again. Historic preservation committees will have dictatorial control over your rehab and won’t care about your schedule or budget. In some cases, your project could be subject to several committees – including local, city, state, and federal who won’t agree on anything. Even when to meet.
Some historic rehabs will require you to preserve the look of the building exterior. Some will require the interior to be preserved as well!!! Our borrowers found this out the hard way. In each case, the rehab budget and schedule more than doubled.
How do you know you will be allowed to change the use of this historic property from residential to commercial?
This is to inform, not scare you, Adrienne. Eyes wide open. Speak to the building departments and historic preservation societies for their requirements and conservatively include them in your plans. Make sure potential lenders know that you know what you’re doing.
Last, a Fannie Mae Homestyle Renovation loan will only work for a mixed-use property if the residential part is at least 51% of the total floor area and you use it as your primary residence. This is not for you.
Partnering with someone who wants to get into this business might be your best option. Of course, my first question would be, what is your experience running an out-of-state Airbnb/Small Wedding-Event venue? That is, this is not just a real estate investment but a business investment.
Best of luck to you, Adrienne.
Hi Jeff, thank you thank you thank you. Great information! To clarify I do reside in Mississippi but still have my CA license as well as my MS real estate license. So I would be hands on with the project. Honestly I would not have a problem with keeping the interior or exterior authentic. My main concern would be safety. I'm hoping that they would honor the fact that the project would need a total gut to bring everything up to code......but I WOULD love for the kitchen and bathrooms to have a little eye candy if allowed.😉
The fact that I live in a very small town with limited resources makes it very difficult to get appraisals or contractor bids to be on the same page. They don't have answers and very few have tackled something like this. Baton Rouge LA is about 50 miles from where I live but those lenders may not be licensed for MS. By the same token Natchez MS is north of me about 30 miles, but the banks have no idea what I'm talking about as far as a renovation/rehab loan.🤦♀️
I will make a fresh start next year and check out the leads you gave me. No sense in even trying now as no one is answering their phone.😂
You've given me some very useful information and I will definitely inquire. You have a Blessed Christmas and a wonderful New Year. Thanks Again.😊
There are two major issues here- the first is how rural/unique this area is, and the second is the historic nature. Your best bet will be to find someone local who has local RE expertise and can evaluate the property and your exit plan.
Im familiar with this area - I grew up just south of St Francisville. I expect that you will have a hard time getting most institutional shops to lend on this. My guess is that most hard money companies are not going to be comfortable lending on anything north of St Francisville.
Chateau Capital Group in Baton Rouge might have interest in a deal like this. Might be worth it to give them a call.
Thank you Patrick for this information...and yes St. Francisville is about 20 miles from Woodville MS along the 61 highway. It takes about 7 minutes from Woodville Ms. to get to the Louisiana state line. St. Francisville and Woodville border each other. As a matter of fact the appraisers I spoke with recommended that I use appraisers in St. Francisville and to also use comps from St. Francisville to get an ARV. I'm sure you are aware that many historic homes in that area as well as Natchez MS are utilized as Bed and Breakfasts, Airbnb's and wedding venues. Most businesses, employment, schools, community, etc. operate through what's called Miss/Lou because of the close border. In Woodville we have a few B&B's, Airbnb's and of course lots of hunting lodge rentals out of Lake Mary. There has been an economic shift recently. St. Francisville is developing more businesses opportunities and more people are moving in that area;however as the home values keep rising in Louisiana, people are looking for more affordable housing 20 minutes away in Woodville. In addition Woodville has seen an increase in visitors driving on the 61 hwy and stopping at the visitor's center looking for places of interest to visit and stay overnight before traveling to Natchez and beyond. Our target in Woodville is to capture those visitors by offering them something of value when they pass through our town which by the way is a Certified Historic Main Street Town in the state of Mississippi. We now have more restaurants to offer (which by the way is right down the street from my property) and we are currently in the process of developing more tourist attractions that would make them turn off the main highway to come and enjoy a little bit of southern hospitality in our town. You already know that St. Francisville is a very beautiful little quaint and charming town. I enjoy leaving the 61 hwy and traveling on the side streets through the downtown historic area. I just love it. My goal is to also add value and charm to our historic area in Woodville. It is a great little town as well. I would love to add my property to the list that would draw tourists to come visit. Thanks again for the lead Patrick and I will definitely give Chateau Capital Group a call. I will not give up until this diamond in the rough has received funding to make it beautiful as it deserves to be. Much appreciation and have a Merry Christmas.😊🎄🎁
Thank you Patrick for this information...and yes St. Francisville is about 20 miles from Woodville MS along the 61 highway. It takes about 7 minutes from Woodville Ms. to get to the Louisiana state line. St. Francisville and Woodville border each other. As a matter of fact the appraisers I spoke with recommended that I use appraisers in St. Francisville and to also use comps from St. Francisville to get an ARV. I'm sure you are aware that many historic homes in that area as well as Natchez MS are utilized as Bed and Breakfasts, Airbnb's and wedding venues. Most businesses, employment, schools, community, etc. operate through what's called Miss/Lou because of the close border. In Woodville we have a few B&B's, Airbnb's and of course lots of hunting lodge rentals out of Lake Mary. There has been an economic shift recently. St. Francisville is developing more businesses opportunities and more people are moving in that area;however as the home values keep rising in Louisiana, people are looking for more affordable housing 20 minutes away in Woodville. In addition Woodville has seen an increase in visitors driving on the 61 hwy and stopping at the visitor's center looking for places of interest to visit and stay overnight before traveling to Natchez and beyond. Our target in Woodville is to capture those visitors by offering them something of value when they pass through our town which by the way is a Certified Historic Main Street Town in the state of Mississippi. We now have more restaurants to offer (which by the way is right down the street from my property) and we are currently in the process of developing more tourist attractions that would make them turn off the main highway to come and enjoy a little bit of southern hospitality in our town. You already know that St. Francisville is a very beautiful little quaint and charming town. I enjoy leaving the 61 hwy and traveling on the side streets through the downtown historic area. I just love it. My goal is to also add value and charm to our historic area in Woodville. It is a great little town as well. I would love to add my property to the list that would draw tourists to come visit. Thanks again for the lead Patrick and I will definitely give Chateau Capital Group a call. I will not give up until this diamond in the rough has received funding to make it beautiful as it deserves to be. Much appreciation and have a Merry Christmas.😊🎄🎁
The only thing I would say is to make sure your variables are grounded in fact-based assumptions and that youre not letting emotions drive your decision making. From what I've seen over the past few years, St Francisville is growing because Zachary is going to hell and St Francisville is the best place to live that's still commutable to Baton Rouge. Livingston is growing for the same reason right now- school quality and life quality, but proximity to BR. The new-ish audobon bridge also plays a role in St Francisville's growth. I dont see where these drivers will translate to Woodville.
Same goes for Natchez - the attraction in Natchez is Natchez. I know Woodville is popular for hunting camps - this was the case even back when I was in high school 20 years ago. I dont know about wedding venues, though. It seems like there isnt much to be gained by using Woodville instead just going to St Francisville or Natchez. Again, these are just points to evaluate; they are not necessarily gospel truths.
If I was in your shoes, I would not be comping to St Francisville. Just my $0.02. Food for thought.