If you are looking to finance your next rehab project, you have to ensure you get the funding right. Here are some methods to use.
All Cash
A seller may prefer getting paid by cash when selling a property. However, for the buyer, there are several advantages and disadvantages. A seller is likely to accept a cash offer from someone with no financing contingencies than a better offer from someone with financing contingencies. Additionally, a buyer with the cash to close will often get a better deal than relying on a lender.
Conventional Mortgage
Conventional lenders include state and federal credit unions and chartered banks. Getting a conventional loan for your rehab project is not easy. Even if you find a rare conventional lender willing to give you an investor rehab loan, the process takes an extended period. You can get a hard money loan from a private lender as they may require a less down payment on the property.
Government Insured Loans
You can get funding from the Federal Housing Administration through its 203k loan program. The program, lending both rehab funds and purchasing price, is only available to consumers who buy owner-occupied properties, not investors.
Owner Financing
Here, the property owner finances the property’s purchase, then gets paid in installments depending on the agreement they have with the buyer. You, as the buyer, may find this a favorable arrangement because you will easily find the money for your rehab project.
Hard Money
The hard-money lenders will lend you about 50-60 % of the property value. If you are having a hard time getting a loan for your rehab project from the bank, you can use this alternative. Since hard-money lenders are not regulated by the government, getting honest ones can be challenging.
Private Money
A private lawyer will review your credit history to assess your habits in borrowing and paying back creditors. If you have a good credit score, you can consider this as your source of financing. They may also review your income and cash flow to determine your ability to pay the loan.
It is best to access all these financing methods before making a decision. If you want to finance your rehab project, consider Capital Funding Source for assistance.
