All Forum Posts by: Jeanne J.

I'm not seeing any replies from the poster either so I'll assume something might be off there. Nonetheless, I'll post a response based on the initial question. Maye it'll help someone else.

The question here appears to be how do you rehab a house if you have little to no money. Obviously, the real answer here is never buy a house that needs rehab unless you have the money to rehab it. Especially in detroit where I don't see too many banks wanting to lend on houses in disrepair. 

But, for argument's sake, lets say you unimaginably fall into that category. Here would be two suggestions for possibly getting that rehab done with some creative means.

1) Offer a renter super low rent and have them take on the repairs.  Something is better than nothing. If the house is sitting vacant, you're getting 0 income coming in. Offer to charge half what you'd normally charge for rent provided the tenant make some of the repairs themselves.

2) Offer a contractor a deal that if they do the rehab for you, you'll pay the materials. But with a condition that their pay will come out of the rent once the house is rented. And they can tack on additional $500 to the bill for the delayed payments.

This likely won't work for all contractors. But someone that is doing it as a side business may very well be willing to do something like that. 

So lets say the rehab is going to come to 6k in labor. And lets say the rent would be $650/mo once you get the house rehabbed.  Bottom line is you're not getting any money coming in today and that house is just going to sit there anyway.

Go ahead and promise the contractor the rent payments until they get paid 6,500 and at least you'll be getting the house rehabbed. And once that contractor is paid off, then you'll be able to pocket the rent for yourself.

In addition to that, once its rehabbed and rented, you may be able to get the financing you need on the house so you can pay him off in full much sooner.

Those would be a couple of options I would consider if I had a house that I couldn't rent because it needed rehab and couldn't rehab because I didn't have enough money to do it.

@Maurice Boston, congratulations on taking a big leap.  If I was in your position, here's what I would do.

Continue to live in the one house.  Assuming the second property is habitable in the least, I would get one of my good (and broke) friends to move in.  Because of your (lack of) financial situation, this sounds like it's going to be a long term project taking months or even more than a year.  It's best to have the property occupied.  Tell your friend to pay you $100/month for rent and pay his own utilities -- the two of you should sign a lease.  Make it clear to him that at some undetermined point in the future, he will have to move out or begin paying market rate rent.  Once both are occupied, get the cheapest insurance you can.

Then, spend as much as you can and work as hard as you can to get the house you're living in rehabbed as fast as possible. Once that first house is in great condition, approach a bank about getting a HELOC on that first house. After you get the loan, move into the second house and rent out the first house. Then use the money from the HELOC on the first property to renovate the second property.

Good luck.  You can make this work if you're dedicated enough.