Rental Property Investor · Atlanta, GA · Member since 2017 · 26 posts · 7 votes
I have a couple rental properties, but now I’m getting the itch to start flipping. My credit score is around 780 and I have been on my job for over 5 years. I’m wondering if should go to bank, mortgage broker, or hard money lender. What’s my best option?
You can try getting an unsecured personal LOC but I'm not sure a bank would do that without a proven track record. As Tyler mentions above a Heloc (secured by your property) could help you secure a HML. It depends on how much you can access on a Heloc and how much you need to fund your project. For example, if you can secure a Heloc for $150k and you only need $100k all in to complete a flip in your market, you can self fund with your Heloc and save on borrowing costs. Alternatively, if you work with a HML, you will automatically have a 2nd set of eyes looking at your deal before they will fund it which adds more safety for you.
If you have equity in your rental properties you could consider getting a Heloc on one/two to fund your projects. This would be a variable rate product so it's best utilized as a short term strategy (ie flipping). Pen Fed does them but you can't have more than 3, maybe 4, mortgaged properties. Their current rate is 6.5% variable which is much cheaper than a HML.
Investor · Biddeford, ME · Member since 2017 · 282 posts · 180 votes
7y
Most rehab properties won't qualify for bank financing, so doing a heloc to free up cash to fund a HML is what I did and would recommend. My latest flip could have used bank financing, but with 20% down plus $15k in reno costs I went with hard money because it was only $8500 out of pocket instead of $43k! Very good way to leverage the same amount of cash into multiple deals! The fast ability to close with hard money helps also in my opinion.
You can try getting an unsecured personal LOC but I'm not sure a bank would do that without a proven track record. As Tyler mentions above a Heloc (secured by your property) could help you secure a HML. It depends on how much you can access on a Heloc and how much you need to fund your project. For example, if you can secure a Heloc for $150k and you only need $100k all in to complete a flip in your market, you can self fund with your Heloc and save on borrowing costs. Alternatively, if you work with a HML, you will automatically have a 2nd set of eyes looking at your deal before they will fund it which adds more safety for you.
Lender · Chicago, IL · Member since 2018 · 352 posts · 147 votes
7y
@Neal Ward best product out there for investment flipping is FannieMae HomeStyle, only 15% downpayment, you don’t need to make mortgage payments during the renovation and you can refi or sell after the reno, there are no pre-pay penalities on conventional market