Say I purchase a home at a great discount. The ARV is $250,000 and I purchase it at $120,000. I use a conventional loan to close.
Say I want to put $30,000 into rehab. What are the EASIEST ways for me to get that money?
1. Could I do a HELOC?
2. Could I do a cash out refinance?
3. What are other easy ways to do this?
The absolute easiest way would be to ask your parents. I mean seriously, wouldn't they do anything for you? But all jokes aside, asking someone for money would be the quickest way. I've done a promissory note before, had my lawyer draft it up and that went smoothly. If you got a good deal, then asking for 30k shouldn't be that hard. Especially if the numbers and comps show it.
Say I purchase a home at a great discount. The ARV is $250,000 and I purchase it at $120,000. I use a conventional loan to close.
Say I want to put $30,000 into rehab. What are the EASIEST ways for me to get that money?
1. Could I do a HELOC? on a personal residence yes, I have not seen HELOC's on investments.
2. Could I do a cash out refinance? Yes/No. Once you purchase conventional you can refi but at the current as is value (mostlikly purchase price) ARV is a theoretical future value not a true value. Most lenders will have you season the title so you will need to do it 6-12 mo out. You will also have 2 closing cost. Purchase & Refi 10-15's K down the drain.
3. What are other easy ways to do this? Conventional? are you trying to not put much of a down payment I assume? Easy sure. You do a fix and flip loan including the purchase. You could cover upto 90% purchase and 90% rehab if your credit and experiance allows it under the UW of the lender. Then you refi 75% of the ARV into a conventional loan with nice low interest and cash out your initial invetment money plus more money to re invest.
1. On the HELOC, could I do that immediately after closing? And is it correct that I'd have equity from the AS IS price (175,000) minus the purchase price (120,000)?
@Nick Rutkowski, thanks for the info. Super helpful. Would you be willing to share your note with me (excluding info you don't want me to see) so that I could get a sense of how you did it?