Three Surefire Ways To Get A Rehab Loan
**Note - If you are just looking for our rates on a rehab loan, click here.
Before we get into the details of getting a rehab loan, I think that it's important to state that they are given exclusively to real estate investors for purchasing homes that are in need of repairs. The investor then fixes (rehabs) the property with the intention of re-selling it for a profit.
You cannot get rehab financing from traditional banks or credit unions because a home that needs repairs does not meet the FHA requirements that traditional lenders must conform to in order to finance a property purchase.
So you won't be able to walk into Wells Fargo and apply for a rehab loan... What do you do to get financing for real estate investment purposes then?
These purchases can only be funded by cash. You have a few choices you can use to get the cash you need to buy an investment property. Let's talk about those options quickly.
1) Obviously if you have the money in your bank account or you have a self-directed IRA, then you can use your own cash to fund your deals.
That really isn't an option for most people however...
2) You can get a loan from someone you are related to or know that meets the option #1 criteria above.
This is often referred to as getting "private money" because it is from an individual and not a lending institution.
Again most people are going to have a difficult time taking advantage of this option, but I wanted to make you aware that there are people using it every day.
Just make sure if you pursue this it doesn't hurt or damage relationships with people you know because that's really not worth it!
3) You can get hard money rehab loans from companies that specialize in originating short term financing to real estate investors using private funds.
Most of these companies are known as "equity based lenders", meaning they will give you a rehab loan dependent on the piece of property you want to invest in.
What does that mean?
It means that they look at the property itself to make a lending decision. If they can see by verifiable numbers that you can purchase, rehabilitate and sell a home for a profit...
...within a short period of time, they will give you the money for your project.
This is regardless of your credit, job history or current income.
And if you do have good credit, you'll get better interest rates and terms on your rehab loans.
What You Should Know About Rehab Lenders
The important thing to realize is that all rehab lenders are NOT created equal. There's two reasons for this:
1) Their sandbox.
2) The offerings and requirements.
What Is A Rehab Lenders Sandbox?
There are several different rehab lenders that all have different "sandboxes" or areas that they focus on. Some will focus on commercial properties, some will focus on development projects, some on raw land, etc. Others focus on single family homes in the median price range of an area.
For example: DoHardMoney.com provides investors a rehab loan for single family homes in the median price range - homes that will sell under $250,000. These homes are easier to sell and easier to rehab. In addition we do not have a minimum loan amount, which is hard to find with rehab loans.
Understanding The Offerings & Requirements For Rehab Loans
Each lender will only offer certain types of rehab loans and some will have varying requirements to qualify for financing. Typical requirements will include:
1) Credit Score.
2) Down Payment.
3) Monthly Payments.
4) Job History.
5) W-2 statements.
6) Bank Statements.
7) Term of the financing, meaning how long you can have the money for.
8) Tax Returns.
9) Extensions. Meaning some time if you go over the initial term of the loan.
These are all things you need to talk to a potential rehab lender about so you can get a rehab loan that will fit your needs and help you be successful as a real estate investor.
DoHardMoney.com provides financing for residential rehab projects up to $850,000.
We also have loan programs with NO credit requirement, NO job history requirement, NO down payment, NO financial record requirements, and NO payments during the initial term of the loan.
If you are an investor who is ready to make an offer on a property (or you already have) and you need financing...
Check out our terms, fees and ltvs on the next page:
[ 2014-03-07 02:11:47 ]
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