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How to Renovate an Investment Property with an Investment Property Rehab Loan

November 20, 2021 Hard Money Lender Leave a comment

It’s commonly known that a renovation loan is an option for homeowners, however, it is also possible to secure a rehab loan as an investor. An investment property rehab loan allows you to borrow money to not only purchase an investment property in need of repair or upgrades but also to do the necessary renovations. Non-owner-occupied rehab loans are typically used for short-term investments, such as a property you intend to fix and flip, however they’re also often used to renovate a rental property before securing more permanent financing. Rehab investors will often find that traditional mortgages aren’t suitable for investment property rehab projects, usually due to long closing times and restrictive requirements. This is where investment property rehab loans come in.

If you’re planning to buy or refinance an existing property for the purpose of renovating to sell quickly or rent out, here’s how to do it with an investment property rehab loan.

Step 1: Start with your research
There is a lot to learn about investment property rehab loans and there are many lenders on the market. Since no two loans and no two lenders are the same, it pays to do your research upfront so you know what to look for and what to be aware of.

Some key things to note about rehab loans for investment properties:

• You can use an investment property rehab loan for single-family residences as well as multifamily dwellings from duplexes to condominium complexes
• Compared with traditional loans, real estate rehab loans have higher interest rates. This is due to the risks involved in rehab projects as well as the short loan terms
• Hard money rehab loans have shorter repayment terms compared with traditional loans, which means they are only suited for short-term fix and flip projects
• There are many reputable companies offering hard money rehab loans, including small local rehab lenders and national online rehab lenders
• Hard money lenders for fix and flip projects will lend you an amount based on the after-repair value of the property. You may be able to secure up to 80% of this value
• Hard money rehab loans are usually secured by the investment property
• There is no minimum renovation required. You can use your investment property rehab loan to cover the cost of any renovations, repairs and upgrades to the property, so long as they add value to the property. This may be major structural works, such as extending the property or converting single dwellings into multiple units. It may also include less major works such as remodeling kitchens and bathrooms, upgrading systems including septic systems, heating systems and air conditioning, replacing appliances, flooring and roofing, major landscaping works, and property improvements such as disability access and energy efficiency

Step 2: Seek approval
Once you’ve chosen your rehab lender, it’s time to get approval. A private hard money rehab lender will focus more on the profitability of the investment property you are looking to purchase or refinance, and less so on your own credit-worthiness. Accordingly, it’s usually easier to qualify for an asset based real estate loan, compared with other kinds of rehab financing, regardless of your income and credit score.

It’s important to seek preapproval before you’ve made a move on a property, then secure final approval once you’re ready to purchase a property. Every lender will have a different approvals process, but hard money lenders keep this process as quick and straightforward as possible. Generally, you’ll be required to show your lender:

The purchase contract. This must include the agreed sale prices as well as its terms. Generally, the agreement will be signed by you, the buyer, as well as the seller of the property and will contain a clause specifying that the purchase is contingent on final loan approval.

A renovation budget. The asset-based lender may also want to see how much you expect to spend fixing the property.

Appraisals. Rehab lenders usually require appraisals of the property. This includes both an “as-is” appraisal as well as an after-repair value appraisal. You will most likely be required to pay for these appraisals upfront yourself.

Proof of rehab experience. If you are planning to complete the rehab works yourself, a lender may want proof that you’ve done it before. Alternatively, you can work with a licensed contractor. In that instance, you’ll have to provide the contractor’s information to your lender, including their business details, license number, scope of the works, estimated costs and proposed timeline for completion of the works.

Step 3: Receive your financing, then purchase and renovate
Once approvals are all sorted, you’ll receive the funding to purchase and renovate your investment property. Working with a rehab loan lender means your application can be processed quickly with money arriving to purchase the property even in a matter of days.

For the renovation stage, your fix and flip hard money lender will most likely distribute funds gradually as work is completed. Your lender should let you know before you begin how they’ll distribute funds throughout the renovation, and you’ll need to keep contractors informed of how and when they’ll be paid based on how your lender operates.

Step 4: Exit the property
Once you’ve finished renovating, upgrading or repairing your investment property, it’s time to exit the property. For short-term investors, this is usually achieved by selling the property, and for long-term investors it is done by refinancing with a permanent loan. When planning your schedule and budget, take into account that it can take time to sell a property or find a renter.

If you want to know more about using an investment property rehab loan for your fix and flip project, get in touch with RehabLend today. We offer flexible rehab loans for investors designed to be tailored to your project to maximize your returns.

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Multifamily Rehab Loans 101

November 17, 2020 Hard Money Lender Leave a comment

If you’ve invested in a multifamily property that needs some TLC, a multifamily rehab loan is an excellent way to fund the deal. Whether you’re looking to renovate a duplex or a multifamily site with hundreds or even thousands of apartments, a multifamily hard money rehab loan can help cover the costs in the best way possible.

What Is a Multifamily Rehab Loan?

A multifamily rehab loan is a short-term loan specifically for the rehab, renovation or remodel of a multifamily property. This includes duplexes, apartment buildings, condominium complexes, student housing and mixed-use development sites. Essentially, a multifamily rehab loan works as a bridge loan, allowing you to renovate a property without using your own money before selling or refinancing with a longer-term option.

The Ins and Outs of Multifamily Rehab Loans

Here’s what you need to know about securing a hard money rehab loan for a multifamily property:

● Multifamily rehab loans are easy to secure. Because multifamily investments are considered less risky than other property purchases, getting a rehab loan for a multifamily property can be surprisingly easy. Generally, financing for multifamily properties is based on the property, as opposed to your own financial situation. This means that you’ll be able to invest in a multifamily renovation property even if you have a less-than-perfect credit score.

● There are many different options available. Since multifamily properties are so varied in terms of their size and scope, there are many different multifamily rehab loans on offer. Accordingly, you’ll need to really do your research and shop around to ensure that you’re choosing a hard money renovation loan that delivers the best rates and terms. This will pay off in the long term. For instance, if you’re choosing a loan that delivers the lowest rates or requires minimal or no down payment, you’ll have extra funds to invest in things that are going to add value to your property. By spending more on the fit out of each premise in a way that will really appeal to the tastes and lifestyles of prospective renters or purchasers, you’ll be increasing the potential of your rental income or sale price.

● You might only need to repay interest. Often, multifamily rehab loans only require you to make interest payments while the project is underway. You’ll then need to repay or refinance the full amount once you’ve finished renovating your multifamily property.

● Interest rates are likely to be high. Due to the risky nature of the investment, you’ll probably find that interest rates for your multifamily rehab loan are high. Since the loan will only be short-term to cover the duration of the rehab, you’ll be able to refinance with a longer-term option that offers lower rates once the project is complete.

● You will probably only need a minimal down payment. Another factor that makes a multifamily rehab loan an affordable option – despite the high interest rates – is the down payment requirement. Many investment property rehab loans require minimal down payments and some don’t require any at all. This means you can cover 100% of the project with financing.

● Lending criteria is varied. The requirements of a multifamily hard money rehab loan vary greatly between lenders, however most private multifamily rehab lenders will consider similar factors when making their decisions such as:

o How many units are in the multifamily property
o The occupancy rate of the property
o Your experience with multifamily property investment

If you’re ready to start talking about your options or want to apply for a multifamily hard money rehab loan, RehabLend is ready to help. We offer multifamily rehab loans with great terms, rates and conditions across a range of situations. Contact us at any time and one of our friendly agents will be in touch as soon as possible.

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Using Hard Money to Flip Houses

September 16, 2020 Hard Money Lender Leave a comment

How to Flip a House with Hard Money

If you’ve got a bad credit score or no track record when it comes to investing in property or flipping houses, obtaining traditional finance to flip a house is quite likely off the table. This doesn’t have to mean that flipping houses as an investment strategy is off the table altogether. An alternative and viable option for many property investors is using hard money for real estate to finance your property flipping dreams.

The pros of hard money fix and flip loans

There are a number of reasons using a hard money loan for flipping houses, or a purchase and renovate loan, is an ideal option. For instance, hard money loans:

• Close quickly. Unlike traditional lenders, hard money lenders like RehabLend can close a hard money fix and flip loan incredibly fast. This allows you to act quickly on a fixer-upper and ensures you won’t miss out on a great deal.

• Are for short periods of time. This is ideal for fix and flip projects, which usually take six months. You don’t want to be locked into a loan for more time than you need to be.

• Are available to people with bad credit scores and no history. Because hard money loans are asset-based real estate loans, your personal financial situation is less important than the potential of the property you’re acquiring. Most asset-based hard money lenders will usually base their loans on either the After Repair Value (ARV), a percentage of the purchase price, as-is value or total costs. They may also base their loan on a combination of all these things – everyone’s approach is different.

• Don’t require you to put in too much of your own money. Another reason we recommend hard money loans for flipping houses is the fact that you don’t need to outlay too much of your own money. This means you can keep your personal money in reserve as a safety net or take on more than one investment at a time, allowing you to diversify and grow your portfolio faster.

• Can be used for seriously distressed properties. Generally, hard money lenders are able to see the potential in properties that need a major rehab and will therefore issue loans for properties that traditional lenders tend to steer clear of.

• Vary greatly. When it comes to hard money fix and flip loans, no two loans are the same. Because hard money lenders aren’t bound by the same requirements as traditional lenders, they each have their own approach. Accordingly, hard money loans offer varying underwriting criteria, borrower requirements, structure and terms. This means you’ll have plenty of options to find a hard money lender that can meet your needs and offer you a deal that best suits your situation and optimizes the potential of your investment.

 

The cons of hard money loans for flipping houses

While hard money loans are certainly a great option for flipping houses, there are things to be aware of. For starters, because hard money loans are considered risky, they come with higher interest rates and higher fees. In addition to standard fees, hard money lenders often charge additional fees including those for credit checks, loan documentation, inspections, appraisals and more. It’s important to check whether these fees are included when signing up for a hard money loan as if you aren’t aware of them, you’ll run the risk of blowing out your budget.

You also need to be aware that there are risks involved for you – the main one being if you default on the loan, the hard money lender can take control of your property.

Like any loan, do your research and make sure you know what you’re signing up for.

 

What to look for in a house flipping hard money lender

Choosing a hard money lender for your house flipping venture is more than just the best rates and fees. You want to choose a lender that is genuinely invested in your project – without getting in your way. You want to work with a lender who is going to fund reliably when they say they will, but won’t be calling you every day to check that things are on track.

Things to ask a prospective lender include:

• How many fix and flip loans they’ve issued
• Whether they fix and flip property themselves or finance only
• How they underwrite their loans
• How long it takes to close the loan
• What fees are involved
• What the loan actually covers – if you need to borrow more than just the purchase price, you need to find out whether the loan on offer will cover the cost of some – or all – of the renovation
• What your options are if the project takes longer than planned

You might also want to ask how about their application process and how easy it is to secure a loan for your fix and flip project. Many lenders, including RehabLend, allow you to apply online, making it easy and convenient to do at a time and place that suits you. Once you’ve found the property you want to purchase, the next stage is property underwriting during which your hard money lender appraises and approves the property. This is can usually happen quickly, allowing you to commence your property flipping venture without delay.

At RehabLend, we genuinely care about our clients and want each one to succeed. We offer the best hard money loans that are designed with your success in mind. To find out more about our competitive rates and terms, click here or arrange a call with a member of our helpful team.

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Long Term Loans: 12 Things to Consider When Choosing a Long-Term Loan

July 21, 2020 Hard Money Lender Leave a comment

Purchasing a non-owner-occupied property as a long-term investment is an exciting and effective strategy for building your wealth. If you have bad credit or are trying to purchase a unique property that traditional lenders shy away from, it doesn’t mean that an investment property portfolio is out of reach for you. Hard money lenders and private money lenders offer cost-effective long-term loans for both people with bad credit and unconventional property types, allowing you to achieve your investment property dreams. But with so many lenders out there all offering different loan products, how do you know which one to choose? Here’s what to look for when deciding on a long-term investment loan.

1. The property types the long-term non-owner-occupied loan covers. Not all loans accommodate different property types, so check what each lender offers before starting the application process. Some lenders, like us at RehabLend for example, offer long-term non-owner-occupied loans for a range of properties including single family homes, multi-family homes, townhouses, condos and planned unit developments.
2. The acceptable market types a long-term investment property loan covers. Also keep in mind that not all long-term loans can be used for properties in different markets. Our non-owner-occupied long-term loans can be used in nationwide urban markets, suburban markets and rural markets.
3. Whether the hard money lender provides long-term loans in your area. Not all lenders have the authority to lend in every state. You want to ensure that the lender you’re choosing is authorized to lend in your state to avoid any headaches down the line. At RehabLend, we can provide long-term loans nationwide, including buy-and-hold commercial rehab loans.
4. What interest rates are on offer. While borrowing with a non-traditional lender such as a hard money lender or a private money lender generally attracts higher rates than traditional lenders due to the high-risk nature of the loan, this doesn’t mean you to need to settle for the first offer on the table. Shop around and see what’s on offer to make sure that you’re getting a rate that is both fair and competitive.
5. Additional costs. In addition to repayments, long-term loans attract various costs including appraisal costs and closing fees. Compare what’s on offer and make sure what you’re being offered is reasonable. Also be sure to double check all the fine print for any hidden charges.
6. How much you can borrow and for how long. Different hard money lenders and private lenders offer different loan amounts and lengths for long-term financing. We usually offer loans between $250,000 and $10,000,00 giving you a broad scope of opportunity. Generally, non-traditional lenders can offer long-term loans for up to thirty years.
7. The down payment requirements. If you’re trying to secure a long-term loan, be prepared to need to pay a down payment of approximately 80%. At RehabLend, we offer a maximum LTV of 80% and a maximum LTC of 85%.
8. The approvals process. When choosing a long-term lender, including private lenders for flipping houses, you also want to be sure the approvals process isn’t going to be overly complex or time consuming. Find a lender that helps reduce the stress of purchasing property with a straightforward, fast and easy approvals process.
9. Credit score requirements. Traditional lenders often have strict credit score requirements which can make it difficult to secure a long-term loan if you have a not-so-great credit score. Choosing a non-traditional long-term lender could be a viable alternative that helps you secure the purchase of an investment property including rehab construction loans even for first time fix and flip investors.
10. The complexity of the loan. Not all long-term loans are straightforward. If, for instance, you are purchasing a single family, non-owner-occupied investment property this would be a fairly easy loan to secure. However, financing for large condo buildings, especially if you are seeking a large-scale apartment rehab loan, will be more complex and therefore require more thorough case-by-case assessment.
11. Whether renovations or rehab are required for the property you’re purchasing or refinancing. Keep in mind that if the property in question needs extensive rehabilitation, renovation or upgrades and improvements this may affect your options when it comes to financing. You may instead need to consider other options such as hard money fix and flip loans.
12. How fast the loan can be approved. If an opportunity has come your way, chances are you’ll need to move quickly. Many hard money lenders can help you secure a long-term loan super quickly – even in a matter of days.

Ready to take the next step?

If you’re ready to explore your options further and would like to know more about the long-term loans on offer at RehabLend, click here or feel free to get in touch at any time. One of our friendly loan officers will be happy to help with any questions, explain the terms and conditions of our competitive long-term loans or get you started with our easy and straightforward loan approvals process.

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Fix and Flip Loans for Beginners

July 2, 2020 Hard Money Lender Leave a comment

If you’ve been dreaming about buying, fixing and flipping property for profit but think it’s out of reach, we’re here to tell you that it’s not. Flipping houses with hard money is a great way for a beginner to get in the game. Of course, like any major financial venture, doing your research is critical. Here are six key basics anyone looking for a first-time fix and flip loan should know.

1. Be prepared to secure unconventional finance. Due to the risky nature of flipping property, securing a loan with a traditional lender is hard enough for veteran flippers, let alone for beginners. As such, as a first-time flipper, you’ll need to look outside the square for alternative options. The good news is, there are plenty of fix and flip financing options even for beginner flippers with bad credit.
2. Be prepared to do your research and shop around for a fix and flip loan. Because fix and flip lenders aren’t bound by the same regulations as traditional lenders such as banks, their offering varies greatly. Don’t be afraid to look around or to negotiate – you don’t need to settle for the first loan you’re offered. Beyond the obvious things such as the term of the loan and its fees, other things to consider when choosing your fix and flip funding include:

• How much of the cost the fix and flip lender will cover
• Whether the fix and flip loan will cover the purchase price as well as the costs of the renovation and any other associated costs
• How fast the lender can provide the money. Generally, with a fix and flip property, you want financing that’s going to happen as quickly as possible so you can seal the deal and start working without delay
• Whether or not there are hidden fees or terms that are going to catch you by surprise down the line. Always read the fine print!
• Whether you’re going to meet the fix and flip mortgage criteria of the hard money lender you’re approaching. For instance, if your credit history is less than favorable, you’ll need to seek a lender that offers bad credit fix and flip loans

3. Be prepared for higher fees. Fix and flip loans attract higher fees. Fortunately, since the idea is that your fix n flip project is only a short-term venture, you won’t be paying these fees for long. Accordingly, expect a shorter term for your fix and flip hard money loan and be prepared to have finished the work and made the sale within that time frame. The good news is, once you get more flips under your belt and have an impressive track record to show fix and flip hard money lenders, these fees will start coming down.
4. Be prepared to work and sell fast. As we’ve mentioned above, a fix and flip loan incurs fees that are much higher than a traditional loan, which means you want to finish and sell your project as quickly as possible to maximize your profit. The less time you need to be paying those interest rates as well as associated costs of owning property such as utility bills and insurance, the better.
5. Be prepared to work hard. They make it look so easy on TV but flipping property for profit is certainly no walk in the park. You’ll have many hurdles to overcome starting with finding the perfect property and then the perfect loan, and the decisions will keep piling up from there. A property in terrible condition will come with an incredibly appealing price tag, but will be a lot more work. Consider whether your time, energy and budget allow for a major structural renovation or if you’d be better off attempting something more simply cosmetic.
6. Be prepared for it to be expensive. It probably goes without saying that flipping property is expensive. When you’re making the decision to flip property, be sure that you are taking absolutely everything into account. While a fix and flip loan might help cover the entire costs of the project or a significant portion of the purchase plus the rehab or renovation, there are other costs you need to consider that might be excluded from your loan. This includes things like legal fees, permits, insurance, utility bills, taxes, agent costs and closing costs. Everything adds up so factor all this in when working out your ARV (after repair value) and make sure you’ll be making a worthwhile profit once all the hard work is done.

At Rehab Lend we offer a range of fix n flip loans for first time investors and beginner flippers designed to help you realize your dreams and maximize your profit. To find out more about our fix and flip financing, head over here or feel free to get in touch. One of our specialty lenders will be happy to help.

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Non-Owner Occupied Bridge Loans

February 27, 2020 Hard Money Lender Leave a comment

TAKE ADVANTAGE OF EVERY OPPORTUNITY WITH REHABLEND’S NON-OWNER-OCCUPIED BRIDGE LOANS

If you’re looking to invest or renovate a non-owner-occupied property and need short-term finance to get things over the line, a non-owner-occupied bridge loan is exactly what you’re after. At Rehab Lend, we offer flexible bridge loans for investors with competitive terms and rates. We’ll ensure you don’t miss out on any opportunities that come your way, whether it’s purchasing a new investment property using equity in your existing portfolio or renovating a property you own but don’t occupy in order to increase its rental or resale value.

There are plenty of reasons to choose a bridge loan for your non-owner-occupied property and even more reasons why RehabLend is the ideal choice. Here are just a few:

• Our investor bridge loans are available at competitive rates. RehabLend offers great rates on our investor bridge loans, including a starting rate of just 7.99%.

• We offer flexibility. As we’re not a traditional bank, there are plenty of features and offers we can provide our customers making RehabLend’s non-occupied bridge loans an excellent option for your investment. For instance, we can provide favorable refinancing and cash-out facilities based on your needs. Plus, we can also loan you up to 85% of the purchase price ensuring your dream property isn’t out of reach.

• Our non–owner-occupied bridge loans are for twelve months. With our twelve-month bridge loans, you won’t be locked in for long periods of time, but will still have plenty of time to achieve your goals.

• We even lend to people with average credit. If you’re concerned that your credit rating is going to hold you back, we’re here with good news. At RehabLend, we offer loans to people with a minimum FICO score of 600, which means your credit rating isn’t going to impact your investment opportunities when you choose a bridge loan with us.

• Our process is fast and easy. It’s our aim to make your life easier, not harder, which is why our approvals and application process is designed to be as straightforward as possible. You can fill out our application form in a matter of minutes and we’ll ensure your money is ready to go the moment you need it. Plus, our helpful team is always happy to answer any questions and lend a hand at every step along the way.

• Our non-occupied bridge loans are available nationwide. Wherever you’re located in the United States, our investor bridge loans might be an option for you. We offer non-owner-occupied loans across the country, making our competitive rates and terms accessible to everyone.

What Can You Use a RehabLend Non-Owner-Occupied Bridge Loan For?

RehabLend’s non-occupied bridge loans are ideal for a range of circumstances and can be used for various property types. For instance, you can use our non-owner-occupied bridge loans to temporarily finance a purchase or refinance an investment property including:

• Single family homes
• Multi-family homes
• Townhouses
• Condos
• Mixed use properties

Get in touch to find out more about our non-owner-occupied bridge loans, find out if you’re eligible or apply today.

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Long-Term Loans

February 9, 2020 Hard Money Lender Leave a comment

MAXIMIZE YOUR PROFIT WITH REHABLEND’S LONG-TERM RENTAL LOANS

When it comes to property investment, buying a rental property with a buy-and-hold strategy is an effective and low-effort option. You’ll make money both from monthly rental income as well as the appreciation from the property when the time comes to sell. You need minimal experience and, especially if you hire a property manager to take care of the work for you, a long-term rental investment also takes up minimal time and hassle. However, if you own or are planning to buy a long-term rental property, finding the right investor loan is essential.

At RehabLend, we offer loans specifically for the purpose of long-term rental properties. With interest rates that are lower than those for short-term loans as well as highly competitive terms, our long-term rental loans are designed to help you make the most of your investment.

Here’s what you need to know.

RehabLend’s Long-term Loans Are Available for a Range of Property Types and Markets

At RehabLend, our long-term loans are designed to suit people in a range of circumstances. You can use our long-term rental loans to secure a non-owner-occupied:

• Single family home
• Multi-family home
• Townhouse
• Condo
• Planned unit development (PUDs)

There are also a number of acceptable markets we can also issue our long-term loans in, including:

• Nationwide urban
• Suburban
• Rural

Get in touch to find out whether we can provide a loan for the property you have your eye on.

Our Long-term Program Is Available Nationwide

RehabLend’s long-term rental loans are available nationwide, giving you access to our great terms and conditions no matter where you are. To find out if our loans are available to you, feel free to contact us today.

We Offer Competitive and Borrower-friendly Terms

Designed with our customers in mind, RehabLend can offer you a number of benefits unmatched by our competitors. Our favorable conditions include:

• Low interest rates. Secure your long-term investment property loan with rates starting at 5%.
• Low costs. Our appraisal rate fees are between $500 and $600 and our closing fees are $1,000.
• Far-reaching loan amounts. We offer long-term loans between $250,000 and $10,000,00 giving you a broad range of options based on your finances, strategy and goals.

Additionally, we offer:

• Loan terms of thirty years with both fixed and hybrid arms
• No seasoning requirements
• A maximum LTV of 80% and a maximum LTC of 85%
• A maximum loan to value with cash-out of 80%

Click here to read more about our terms.

Our Approvals Process Is Quick and Easy

We aim to take the stress out of buying property with our straightforward approvals process. Our application form can be completed in minutes and, as soon you’re ready to make a move on a property, we’ll help you secure your finance. We offer fast closing times of between three to four weeks so you can secure your finance and start making money off your investment property straight away. And, to make it even easier, our helpful and friendly team is available to answer any questions along the way.

You Don’t Need Perfect Credit Score to Be Approved for Our Long-term Loans

Our minimum FICO score for our long-term loans is 575, giving you the opportunity to invest in a rental property even if you have a below average credit score. If you’re not sure what your FICO score is or whether or not you’d be eligible for a RehabLend loan, feel free to get in touch to find out more.

Ready to Secure Your Loan?

If you’re ready to purchase a long-term rental property or want to refinance an existing long-term rental property, get in touch to find out how we can help you or to get the process started now.

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Rehab Investor Loans

April 21, 2019 Hard Money Lender Leave a comment

The strict requirements for investors and people just looking to get their foot on the property market means that the private real estate lending has become an increasingly popular option.

Also referred to as private hard money funds these are provided by private investors or private companies who are willing to lend money for a specific purchase.

This type of lending is a suitable option for homebuyers who know they will struggle to qualify for a conventional mortgage due to their credit history or level of debt. Self employed people may also encounter problems qualifying for a traditional mortgage if their income is not steady and fluctuates greatly at times.

It is much easier to qualify through the private lending route and the approval process is much shorter. This is normally completed in the space of a fortnight as opposed to thirty to forty five days for a regular mortgage. Whilst it is must be noted not everyone will be successful by taking the private lending option, the chances of being accepted are still generally quite high.

Fix and flippers tend to favour this route as, mentioned previously, the repayments periods are very short, (normally twelve to twenty four months) which fits into their plan to sell on the property quickly using it as part of their investment project.

Regardless of how good your credit history is, most conventional mortgages will not approve loans that require extensive work. If a home has been left vacant for a lengthy period of time significant repair work may be required, for example the plumbing may need to be redone, or the residence may have fallen victim to vandalism. This is where the private lending option also becomes more appealing.
Broadly speaking the largest rehab loan amount offered by private lenders is equal to 80% ARV (after repair value), with quite a few offering less. The more experience the applicant has had with rehabs and better their credit score is the higher the ARV will be. In simple terms if a company (or private individual) offers an ARV of 75% this means they will finance up to 75% of the expected valued of the property after renovations are complete.

For the investor this means they should expect to cover at least 20% or more of a properties ARV with their own money. It should also be noted that some lenders require that people pay for the renovation costs up front and then reimburse the investor after. This is mainly done as a safeguard to the lender, who naturally would want some guarantees the applicant will not default and will honour their agreement.

Taking all this into account, some things for the applicant to bear in mind before applying would be, are they comfortable with the short repayment timeframe, and the higher interest rates that come with this type of lending? As with all investments, it is important the individual does all his or her research before committing to such a project.

The rehab investor loan is perfectly suited for someone is purchasing a rental property that requires a little bit of work done or a fix and flipper, looking to get in and quickly with a healthy profit in their pocket.

To summarize they offer short approval times, interest only repayments and they consolidate the cost of the house and the renovation costs into one simple payment.