Updated about 23 hours ago on . Most recent reply
Rehab loan- advice??!
I’m going to close on a property in three weeks up in Philly—a $300K investment with four one-bedroom units that need cosmetic fixes. I have capital to fix them, but I don’t want to tie all my money up in one deal, and I’m wondering if anyone has ideas on the best way to finance it.
So far, I've thought of a few options. First, maybe pulling a HELOC on the property. I also tried seeing if I could borrow against my 401(k)s, but that won't work because they're from old employers. I considered taking a loan from a friend at a 10% interest rate—I could do this, but I don't want to involve people I know well.
I’ve also thought about using a personal loan. These are around 13% interest, which seems really high. Finally, I found a loan broker who said he could call banks and get rates around 6–7%, but there would be a fee, and I’m wondering what I should do. None of these options seem very attractive.
I don’t want to spend all my money on this deal—I want to scale down the line—but I’m at a loss. I’m thinking of just making a list of banks and calling them myself. The initial renovation scope is only $20K, but for the whole building it could run up to $80K.