Financing A 20+ Unit That Needs Rehab
I can buy a 25 unit for 150k - that needs 50-75k in capital improvements (rehab.) altho i could do the deal all cash... i would be stretched out..and stressed
what are your thoughts on:
1- see if owner will hold note till rehab and rented, then refinance and pay off note ..(maybe get a little cash out)
2. get a construction to perm loan with 20-30% down
(con: high loan costs to loan amount ratio)
Projected:
120k gross scheduled income annual
Projected expenses are 37% of Gross Schedule income ( with a loan)
You could also try to find a contractor who may front the expense for a bigger payout in the backend when the work is complete and you have full occupancy. By that time it may be alot easier to get a loan from a bank with high occupancy. At the same time give the contractor a small "fee" each month until work is complete. You need to make sure about the occupancy though. At 400 a month can you raise the rents when the work is complete? Just an idea.....
I work for a mortgage broker. I like your first idea best.
Next , I would try to find a small idividual investor who wants a short term simple interest loan and not charging high hard money/constuction loan rates.
Your last chioce should be traditional construction loan and only if numbers look good on paper. Then, be sure to find honest upfront mortgage broker!
hard money lenders do short term loans (usually higher rates) but allows you to close quickly and then refi to a more standard loan.
are the properties 1-4 unit residential properties? If so, would a HELOC be better than a cashout re-fi?
all 3 are Single Family House.
as you said , I can (1) cash out refinance or (2) HELOC or (3) sell them
but my question is whether any Lenders out there willing to do 3 refinance or HELOC in one deal ?
the second of my question is whether the 80% rule still apply in investment properties .
thank you very much Chris !
can you tell me which bank(s) are investor friendly ? i mean willing to give HELOC for all 3 rental properties ?
thanks again !!
check out credit unions. I have used Penfed C/U. You basically have to be a military ofc. or make a $50 donation.
The caveat is the lower LTV on investment properties.
Turns another local CU have very competitive loans on APTs.