Need rehab funding for a St. Louis duplex, denied by a contractor lender. What would

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Need rehab funding for a St. Louis duplex, denied by a contractor lender. What would

Steven Lester Haskins
Member since 2026 · 41 posts · 15 votes

Hi everyone,

I own a two-family property in St. Louis, MO that needs about $50,000 to $55,000 of interior rehab before it can be rented. A licensed contractor gave me a written estimate of $52,338.75. The work is flooring, electrical, doors, stairs, balconies, and a full renovation of both bathrooms.

Where I stand:

- I own the property and it has a first mortgage.

- A St. Louis nonprofit (St. Patrick Center) has given me a conditional commitment to place residents in both units once the property passes inspection, so the rent is lined up.

- I plan to refinance with a DSCR lender once the rehab is done.

- I applied for contractor financing and was denied because of my credit. I have a steady income, but my credit score is right at 600.

- I am pursuing city and state housing grants, but those take months and may not pay for work already done. Right now, I owe around $175k on the property at ARV will be $325k. The rents will be $1250 per month. My mortgage payment is $1057 per month. I presently have a 3.25% interest, so I do not want to lose that. Ideally, I would like to borrow separate for contractor draw.

My question is simple: how do you fund a rehab like this when your credit is the problem and the property is the strength?

I would like advice on:

1. Hard money or private lenders in the St. Louis area who lend on the property's value and not on credit score.

2. Whether I should look for a partner with equity or credit, and how to structure that fairly.

3. Whether I should phase the work, doing the most important items first.

4. Anything you wish you had known before doing this.

If you lend in Missouri, or have done a deal like this, I would be glad to hear from you here or by private message. I can share the contractor estimate, the nonprofit letter, and the numbers with anyone who is serious.

Thank you in advance for any help.

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Muyees Ayilara
Lender · Boynton Beach, FL · Member since 2026 · 247 posts · 118 votes
1w

Steven, this is actually a good deal, you just have a credit problem, not a property problem. Do not lose that 3.25% rate.

Here is how I would do it if I was in your spot:

1. Hard money for the rehab only. You owe $175k, ARV is $325k, so you have $150k in equity. A St. Louis hard money lender will lend on that ARV, not your 600 score. You want $55k to $65k for rehab plus closing costs, interest only for 6 to 9 months. You do the work, you get the nonprofit inspection passed, you get it rented. Then you refinance with DSCR and pay off the hard money. That way your first mortgage stays at 3.25%.

2. Do not bring in an equity partner unless you have to. If you give up 30 to 40% of a $325k property for $55k, you will regret it later. A partner makes sense only if no lender will do it. If you do bring one in, do it as a loan, not equity. Pay them 12 to 15% interest for 6 months plus a small fee, get a written payoff date. Keep the house.

3. Phase it, but do it smart. You cannot get the nonprofit to place residents until you pass inspection, so you have to do everything that is inspection related first. Flooring, electrical, stairs, balconies, bathrooms. That is all inspection stuff. Do not split it into two phases if it delays the inspection. Do it all at once if you can get the $55k.

4. What I wish I knew: Get the DSCR lender to pre-approve the ARV deal BEFORE you start rehab. Have them tell you what rent and what appraisal you need to refinance. You already have the nonprofit letter and the $1,250 rent, that is huge. Get it in writing from the lender so you are not stuck with hard money after rehab.

If you want, send me the contractor estimate and the nonprofit letter. I can look at the numbers and tell you if the DSCR refi will work at $325k ARV. You are close, just do not refinance that first mortgage.

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  • Steven Lester Haskins
    OP
    Member since 2026 · 41 posts · 15 votes
    2d

    My credit score is 600-611. I was out of work for almost two years, so now iI am in the rebuiling phase.The property is in my name no entity. Property address is 2612 Ann Avenue, Saint Louis, MO 63104. I have no cash. St.Patricks is the nonprofit. I have personally done rehab work in the past on properties that I have owned. Hopson Home Improvement is the company I want to hire to finish the rehab work.

    0Reply
  • David Newby
    Member since 2026 · 3 posts · 0 votes
    2d

    Steven — David Newby with REVIVE! Funding. Your duplex deal is well put together — preserving the 3.25% first makes sense. Before I point you anywhere, a few paper questions: (1) roughly where does your credit sit? (2) income you can document? (3) is the Dec 1 contractor start firm? One thing worth knowing: there's also a lane that doesn't touch the property or your first lien at all — unsecured funding decided on credit and income alone. Your answers tell me which door fits. — David

    0Reply
    • Steven Lester Haskins
      OP
      Member since 2026 · 41 posts · 15 votes
      2d

      Hi David,

      My credit is between 602-611. I was out of work for almost two and now I am rebuilding. Salary is $185k.

      0Reply
  • Jay Johnson
    Lender · Tulsa, OK · Member since 2026 · 7 posts · 0 votes
    2d

    Protect the 3.25% first mortgage. That's the whole frame — any solution that refinances it away (a 203(k), a HomeStyle, a standard cash-out) trades a great rate on $175k for temporary convenience, and at today's rates that's the most expensive money in this deal.

    So the target product is small and second-position: a home-equity loan or HELOC in second lien, or a small portfolio/commercial loan from a local bank or credit union that underwrites the property and the exit rather than just the credit score. These are genuinely harder to find on a non-owner-occupied duplex — the lender pool is smaller — but your file has what those lenders actually care about: a strong equity position ($175k owed against roughly $325k after repair, so even with a $55k second you'd be around 71% combined loan-to-value against the after-repair value), a defined scope with a real contractor bid, and a local nonprofit committed to placing tenants in both units once it passes inspection. That commitment letter is gold with a local portfolio lender — get it in writing and put it in the package.

    Build the lender package before you apply again: the contractor bid ($52,339), whatever supports the ~$325k after-repair value, the nonprofit's letter, pro-forma rents, and a one-page summary addressing the denial head-on — the score is the issue, here's the equity and the exit. A ~600 score will still close some doors, but on a second-position deal with this much equity and a documented tenant exit, it shouldn't close all of them. Local banks that keep loans on their own books are your first five calls.

    Jay Johnson, Producing Branch Manager, All Western Mortgage — Tulsa, OK. Rehab and second-lien structuring is a big part of my business — happy to connect if you want help pressure-testing a quote.

    0Reply
  • Steven Lester Haskins
    OP
    Member since 2026 · 41 posts · 15 votes
    2d

    Hello,

    I would love to chat with you more on this. I did not realize it was so tough to get a measly $60k loan.

    0Reply
  • Amanda Snyder
    Lender · Newport Beach, CA · Member since 2026 · 17 posts · 6 votes
    1d

    Hi Steven,

    Good post, and you've done more homework than most people asking this question. A written contractor bid, a placement commitment from St. Patrick Center and a planned DSCR exit are exactly what an asset-based lender wants to see.

    I'm with Marshall Reddick, and we lend mainly on the asset. That keeps the red tape down: we don't calculate DTI and we don't pull a full hard credit check. Your background and payment history still matter, but the property and the plan carry most of the weight. That's the answer to your question #1.

    One thing to know before you talk to us: we only lend in first position. We would pay off your current mortgage (about $175k) and then fund the roughly $52k rehab budget through draws. Your total loan would be around $227k, or about 70% of your $325k ARV. That's a comfortable spot for an asset-based lender.

    The tradeoff is real.

    You’d give up the 3.25% rate. Before you decide, run both paths:

    • Keep the 3.25% loan: you'd need a second-position lender, a HELOC, or a partner. These are harder to find with a 600 score, and seconds usually cost more. The grants could fill part of the gap, but as you said, they're slow.

    • Refinance the whole thing: you pay more interest during the rehab period. In exchange, you get the full rehab budget now, tenants in place sooner, and a clean DSCR refinance at the end. You'd be refinancing out of the 3.25% at that point either way, unless you plan to keep both loans.

    A few other thoughts on your questions:

    • Check the DSCR exit now. If $1,250 is the rent per unit ($2,500/month total), a DSCR loan around $227k should work. If $1,250 is the total, it gets tight. Also ask your DSCR lender about its minimum credit score. Many want 620–660. Spending the rehab period raising your score from 600 could help you a lot on the refinance.

    • Phasing: if you phase the work, start with whatever the inspection needs for St. Patrick Center to place residents, such as the electrical, stairs and balconies. Rent coming in sooner strengthens your refinance.

    • Partner: possible, but you’d give up equity in a deal that already works. I’d try the lending route first.

    I’m happy to look at the contractor estimate and the numbers with you. Feel free to DM me or email me at [email protected].

    0Reply
  • Nicholas FloydBusiness Member
    NY · Member since 2026 · 359 posts · 111 votes
    1d

    I am a business funding consultant, I assist with helping investors gain access to business working capital check your inbox

    0Reply
  • Chris ColtonPro Member
    Investor · San Antonio, TX · Member since 2026 · 161 posts · 67 votes
    1d

    Steven, your instinct to protect that 3.25% first is exactly right, and your numbers are more workable than the credit score suggests. $175K owed plus $60K of rehab against a $300K+ ARV, with the tenant placement already committed, is a property story, not a credit story.

    I place borrowers with investor lenders and I am building that bench out now. I do not know yet if one of mine will take a standalone second-position rehab loan at a 600 score, and I will not pretend otherwise. If you are open to it, send me the contractor estimate and the nonprofit letter and I will run it past two or three of them and come back with real answers either way.

    Either way, get the DSCR lender's refi targets in writing before the rehab starts, like you were advised above. That exit is the whole deal.

    210-756-9075
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