Best rehab funding options?

Question

Hello everyone,

I am going into my first foreclosure property that needs a gut remodel. I can open a HELOC on my residential property, but that may not cover all rehab expenses. What loans are recommended? Thank you in advance!

Jeremy Horton · Answer

What is the budget for the remodel?

The 0% credit cards and balance transfers is good to use for fixtures and stuff with hard fixed costs. Easy to use yourself too

HELOC works (there may be some places that do a HELOCs on rental properties)

I personally have used a 401k Loan on a few occasions - You're essentially borrowing money from your 401k and paying yourself back (interest goes back into your 401k as opposed to a bank) and if you don't pay your 401k back the loan would simply become a withdraw (maybe some tax penalties, but you could probably finagle a workaround). So low cost, low risk in my opinion which is why is it generally my first choice

After those I would go HML/PML - this is likely going to be your highest cost loan

Matt Bridgman · Answer

Please don't go around just randomly applying for credit cards. I am a business loan broker and there is a way you have to apply in order for it to work. You have to know which cards are pulling from which bureaus and what scoring model. If you apply at three places and they are all using the same model you will get turned down or very low approvals at two of them plus hammering your credit. The best way is to work credit cards with a line of credit + a credit card if you don't go down the HELOC route. DM if you want to see more of how this works.

Matthew Becker · Answer

Good luck.  I suggest you apply for three at once. Then, it won't look like you are applying for a bunch simultaneously because they won't see each other.  It will still show up as three inquiries.  Don't do more than that.  The hit for pulls is minimal compared to the credit you need.  Plus, you will have a higher credit score when you pay them off.

Kisaki Nicole Kaopua · Answer

I appreciate the insight and honesty! I will definitely be looking into these credit cards. What a great work around :)

Matthew Becker · Answer

It depends on how short you are.  When I was young in the game.  I used credit cards all the time.  Dave Ramsey would not be pleased, but he went bankrupt investing in real estate and is only rich because he tells people how stupid he was all day.  For some reason, people listen to him.  Generally, you can get a card that offers 0% for transfers.  So charge up a card and transfer it.  You can get a car loan on your car or truck if you have a nice car with no debt.  Do you have any other assets you can borrow against?  If you paid cash for the foreclosure, you can get a construction loan at a local community bank or credit union.  These relationships are essential to establish.  I would probably not use a hard money lender.

Home Depot generally offers 6 months interest-free, and  Lowes probably does as well. But there are a ton of cards out there, that officer. I glanced, and I saw that Wells Fargo and Citi Simplicity have a 21-month offer.   That was just what AI said.

Devin Peterson · Answer

Kisaki, you want to utilize a hard money or Bridgemount product to acquire the property and finance the renovation budget. You can do this on foreclose properties without an appraisal. Hoping to connect a chat more if you’d like!

Kisaki Nicole Kaopua · Answer

paying all cash for this property so no DP required. Thank you for the insight, I’ll look into a hard money lender

Kisaki Nicole Kaopua · Answer

Correct just need rehab $. Thank you for the input! Looking to buy a foreclosed home near Shenandoah to turn into STR!

Raymond J. Rodrigues · Answer

@Kisaki Nicole Kaopua as the previous comment had mentioned, I would take out a hard money loan as well. It’ll cover all your rehab costs. You can use your HELOC for down payment to acquire the property instead.

Taylor Dasch · Answer

So you purchased it cash and just need the rehab $? I would still use a Hard Money Lender for something like this - some have a minimum but you may just have to search for a bit and find one that doesnt. You can also try FB for PMLs but a lot of those seem to be scammers.  What market are you in?