I own a 3 unit property that needs to be rehabbed in order to sell. I am new to real estate investing. I made a few mistakes when acquiring this property and I am considering selling, but I have questions. What are my best options for financing? The property is in my name and not my business name. Should I change it to my business name first? I have to fix the issues with the property before I can put it on the market and recoup my losses and hopefully earn a profit.
Lender · Member since 2022 · 338 posts · 374 votes
3y
I think a good place to start would be private money as well as reaching out to hard money lenders and seeing if there are any products they offer that will finance just the rehab - best of luck!
Real Estate Agent · St Petersburg, FL · Member since 2019 · 320 posts · 182 votes
3y
What are the issues with the home? And who do you envision your target buyer to be?
If you envision it to be for move in ready buyer- You would need to determine what the costs would be to repair the property and how that would impact the sale value.
If you envision it for a cash buyer - It may not be worthwhile to do anything to the property
If you envision it for a savvy owner occupied buyer - They may be able to qualify and use a Conventional Homestyle Loan or FHA 203K loan to wrap the rehab costs into their mortgage.
The issues with the property would definitely impact the sales price so they need to be resolved. After they are resolved there should be no problem with a sale. There is already a tenant in 1 unit and 2nd unit is already on the market for rent. The third unit needs the rehab, that would allow the 3 units to be put on the market to be sold. Your thoughts? I just want to make an informed decision.
Lender · Fort Worth, TX · Member since 2016 · 8k+ posts · 6k+ votes
3y
@Sean Greene Hmmm, ok, let me clarify a couple of things here just to help with what direction to go in if you don't mind:
1. House Hacking - this means that you are occupying the property. If you are occupying the property your loan options will be different than if you did NOT occupy the property. Meaning, if you occupy the property, then an FHA or Fannie Mae renovation loan would be the right direction to pursue to renovate the property. This means that you would need to qualify for the loan, have a contractor to perform the work, and refinance your current loan on the property (assuming you have a current loan?).
2. Selling the Property - if you want to sell the property on the MLS (like the open market) then usually we want to have a property up to a certain standard. That standard is "what loan would my buyer need to purchase this property". In order to determine that, we need to lean on a realtor to provide us guidance. Sure, I could list out thousands of things, type up a novel....but I don't' want to do that. Just get a real estate agent to guide you on your marketability of the property and they will tell you what you need to do (assuming that the realtor is reasonably good at their job).
3. If you do need to do work, and it's not your primary home, then there are lots of other renovation loans at your disposal. You will need to get with some local lenders in order to find out what loans you have as a choice.
4. No need to change ownership of the property to do any of these things.
Lender · Member since 2022 · 338 posts · 374 votes
3y
I think a good place to start would be private money as well as reaching out to hard money lenders and seeing if there are any products they offer that will finance just the rehab - best of luck!
Rental Property Investor · Chester County PA · Member since 2021 · 3 posts · 0 votes
3y
Hi Sean, I am an investor in the Charleston area and actively buying. Would you mind sharing the property details? We may be able to work something out, or at least get your questions answered. Feel free to shoot me a message!
Hi Sean, I am an investor in the Charleston area and actively buying. Would you mind sharing the property details? We may be able to work something out, or at least get your questions answered. Feel free to shoot me a message!
Hi Eric, What details do you need? It is a 3 unit property sitting on 1.38 acre. The 1st unit is downstairs and consist of a 2000sqft , 4 bedrooms 2 bath and has a tenant in place, 2nd unit is upstairs and consist of 1650sqft, 3 bedroom 1 bath. The 3rd unit is on the same property and is listed for rent, 1650sqft, 3 bedroom 1 bath single family home. If you know the area, then you know there is a shortage of homes on the market so it would be worth the asking price when I put it on the market.