Investor · Indianapolis, IN · Member since 2016 · 221 posts · 134 votes
Hi BP community,
I'm still pretty green to the REI world and trying to branch out from what I have been doing so far, which is buying relatively turnkey properties. I invest out of state, although we are thinking of moving within the next two years to be in the market where we want to invest. I would love to save up enough cash to be a cash buyer in a low priced market (currently buying in huntsville and looking into Indianapolis too).
If I buy a property for all cash, can I get a loan for just the rehab that needs to be done? What type of loan would that be? What are the terms typically? Pros/cons of doing it this way? Ideally after rehabing I could cash out refinance and move on to another property with the same money. Thoughts? I'm eager and the thought of having to save up for a cash purchase and a rehab budget is getting me too impatient.
Investor · Cleveland, OH · Member since 2015 · 6k+ posts · 2k+ votes
9y
@Samantha Soto, if you've bought wisely enough (ie. <70% of appraisal), you can Re-fi (ie. Fi) the FULL purchase price, using Fannie's "Delayed Financing Exception", straight away.
What you then do with your cash again, is up to you! Cheers...
Investor · Cleveland, OH · Member since 2015 · 6k+ posts · 2k+ votes
9y
@Samantha Soto, if you've bought wisely enough (ie. <70% of appraisal), you can Re-fi (ie. Fi) the FULL purchase price, using Fannie's "Delayed Financing Exception", straight away.
What you then do with your cash again, is up to you! Cheers...
Peoria, IL · Member since 2011 · 365 posts · 182 votes
9y
Is this Buy and Hold or flip?
If Buy and Hold, a Line of Credit, secured by the property would allow you to borrow for thia project, pay it back, then borrow again for the next one.
You also might just want to buy with cash, then refi to pull your money out so you can fund rehab/repeat process. If you wait 6-12months you can potentially pull more cash out depending on if you bought with good equity. (prior to 6-12 months banks on the residential side banks lend on the lesser of purchase price and appraisal)
Real Estate Agent · Indianapolis, IN · Member since 2012 · 20 posts · 13 votes
9y
Hi Samantha. I live & invest in Indy. If you are capitalized enough to purchase, I suggest you hold the cash to maintain a strong credit profile and look for purchase + renovation funding. In the private lender market it's easier to get money for both because it makes a bigger loan. If you are certain you just want the renovation cash, you can reach out to banks that will give you a HELOC or a private lender willing to do renovation-only. There are so many, I'm sure you can find someone who will.
The cash out refinance is the trickier part of what you say you want to do. Conventional lenders are wary of cash-out on investment properties.
I'm happy to discuss the particulars of this market. I invite you to visit my profile and if you think I can help, just ask.
Investor · Indianapolis, IN · Member since 2016 · 221 posts · 134 votes
9y
@Michael Herr This would be a buy and hold property. I had heard its hard to get a HELOC on an investment property. But I'm guessing some banks will do it. I haven't dealt with private lenders yet. Isn't it true that they want you to have a proven track record of success before they will lend to you? We have two buy and hold properties so far, but both are turnkey...nothing to write home about in terms of my ability to get a great deal. @Account Closed at this time there are no details because I have no deal lined up. I am just trying to strategize so that I can go after a deal, and make it better than those I have done in the past. Currently working on building up my savings to have enough to make a cash purchase.
Investor · Cleveland, OH · Member since 2015 · 6k+ posts · 2k+ votes
9y
@Samantha Soto, based on your above post, you shouldn't need to wait until you can pay all cash. For example, if you've saved just 25% of your Offered price for your carefully sourced bargain, any number of Lenders should lend you the rest, conventionally.
Realtor · Greensboro, NC · Member since 2015 · 85 posts · 23 votes
9y
How about hard money? If a property is listed for $30k and needs $30k renovation. Couldn't you pay cash for the house and ask a hard money lender for the other $30k?
For fix and flip strategy.
Samantha isn't a Flipper. Being forced to re-finance out of hard money Rates seems a bit counter-intuitive for anyone who was able to pay all-cash to begin with.
Seems to me, a bit of extra time spent finding an investor-friendly CONVENTIONAL (lower Interest Rate) Lender from the outset might pay better dividends. Cheers...