Ask your lender about a construction loan at a variable rate which would be for about a six month period. It varies from lender to lender and state to state, I believe.
You would draw the money out of the construction loan as needed - probably in thirds. You make payments only on the amont you've drawn out, etc...
The total loan at the end of the project is the amount you use for construction plus the original amount you borrow to purchase - if any. Usually they use what is called "ARV" - "after repair value" to determine the worth of the house in order to justify a loan of this type. Hope this is helpful. Ask your lender about how they would set up a loan like this for you. Good luck!
The was able to get financing for my rehab project. I completed a work write up the of the stated repairs that I planned to make to the property. I then took this to a local banker. He ordered the appraisal of the building with the stated repairs in mind. I the banker then sent me to the construction loan department of his bank. I secured a six month loan. Once the fourplex is completed I will get a final appraisal and have to pay 80% LTV on the project. I should wind up with a no money down deal.
On the second fourplex that I am ironing out the details on it at present. The same banker will only go 70% LTV. I will have to come out of my pocket with about 17k in order to make the deal fly. I will still have 20% equity plus the 10% that I put into it, to make the 30% down. This is not what I had planned but I will be able to recoup my 17k within 26 months from rental income, if I hold on to the property.
I only wish I knew how to do more of the repair work myself. But one can not have good looks and everthing (laugh).
Ask your lender about a construction loan at a variable rate which would be for about a six month period. It varies from lender to lender and state to state, I believe.
You would draw the money out of the construction loan as needed - probably in thirds. You make payments only on the amont you've drawn out, etc...
The total loan at the end of the project is the amount you use for construction plus the original amount you borrow to purchase - if any. Usually they use what is called "ARV" - "after repair value" to determine the worth of the house in order to justify a loan of this type. Hope this is helpful. Ask your lender about how they would set up a loan like this for you. Good luck!
Hello pbodys
The was able to get financing for my rehab project. I completed a work write up the of the stated repairs that I planned to make to the property. I then took this to a local banker. He ordered the appraisal of the building with the stated repairs in mind. I the banker then sent me to the construction loan department of his bank. I secured a six month loan. Once the fourplex is completed I will get a final appraisal and have to pay 80% LTV on the project. I should wind up with a no money down deal.
On the second fourplex that I am ironing out the details on it at present. The same banker will only go 70% LTV. I will have to come out of my pocket with about 17k in order to make the deal fly. I will still have 20% equity plus the 10% that I put into it, to make the 30% down. This is not what I had planned but I will be able to recoup my 17k within 26 months from rental income, if I hold on to the property.
I only wish I knew how to do more of the repair work myself. But one can not have good looks and everthing (laugh).