Over Budget on rehab loan
I'm in the middle of a multifam BRRR. Acquired the property for 1.6m + 200k (financed) rehab budget with DSCR ARV of $3.1m. Awesome deal, right!? The problem is that the project is over budget: I'm going to end up needing $300k rehab funds, and I don't have the additional $100k to float until refinance. I'm considering going to the bank and being completely transparent to ask for an increase in the rehab loan, but they have a much more conservative ARV in their appraisal based on much lower projected rents ($1,400 avg vs the $2,000 avg we're actually getting on the finished units), so I'd have to convince them of the higher ARV. Has anybody ever done this? Any recommendations?
Most Popular Reply
Assuming you qualify I'd go the 13% HELOC. If it takes you 6 months on a $100K rehab to get the units finished, leased and refi'd then you're going to pay $6500 in interest...what's a refi going to cost $15-20K with closing costs, any points, appraisal etc. etc. High interest for a short duration that you control seems like the way to go to me.