Financing Rehab Options

[Connor Lorio]

Hi BP,

Looking at a duplex in Everett, WA for 500k. After inspection I realized it needs a lot more work than I thought. Will need updated plumbing, electrical, potentially a foundation fix in addition to new windows and basically a full remodel of the upper unit. Estimating between 40-80k depending on what gets done. 

With the price of the house I wont have money to fund the rehab. What are some solid options for financing? Hard money, bringing in a partner, etc

[Evan Polaski]

@Connor Lorio, it sounds like you have some more research to do before really looking at buying a property, which you are clearly starting to do by asking this question. As noted, if you are going hard money with a 1 yr term on the loan, you need to be sure you have sufficient equity in the deal to take the loan out. You are also going to be greatly increasing your monthly carrying costs every month the HML is outstanding.

Real estate is an investment like any other.  You can make money or lose money, and money is made when you buy.  The more you pay, the lower your returns will be, all else being equal.  You make your returns from cash flow and appreciation, with typically a vast majority coming from appreciation.  Clearly everyone here is bullish on real estate, but sometimes I get the sense that many people are sold that real estate is the only way to build wealth, which is simply not true, and for many it is not even a good way to build wealth.