How to Fund a Rehab on Investment Property

Question

If I’m trying to buy an investment property using the buy and hold strategy & rent it out, how can I fund the rehab if i only have enough for the Down Payment?

Will Barnard · Answer

Lots of options. You can get a private money second position loan, a purchase loan which also has a renovation loan attached to it, hard money (though most won’t do second position), money partner, credit cards, line of credit from some other asset, . . . . . Or even seller financing.

Stephanie P. · Answer

Hey Claudia

Use hard money.  You should be able to get 80% of the purchase price and 100% of the rehab financed in draws.  If you have to, use credit cards or a money partner for the rehab because the draws are paid out AFTER the work has been completed.

Yes, it's a bit risky and you have to buy the property right (meaning don't exceed 70% of the after repair value with ALL costs including carrying costs, closing costs and rehab).  If you follow that simple rule, you will be fine most of the time.

Best of luck

Stephanie

Will Barnard · Answer

Part of the process of the BRRRR strategy is the refi portion to get you back some or all of your initial cash invested so you can keep going but not all properties will be in a position to get the refi so that is something you need to consider with your lenders and you should have an alternative for that instance.

Stacy Davis · Answer

Hard money lender. Then you could refinance the loan, ideally getting most of what you put for the down back out. BRRRR

Claudia Rhoden · Answer

@Will Barnard Would the BRRRR strategy be best for something like this? That way i can pay the loan back when I refinance?

How to Fund a Rehab on Investment Property

Most Popular Reply