Your best options for obtaining funds for your rehab projects

Make bargain-hunting for fixer-uppers a lot easier for yourself if you are targeting:

• Single family residence
• Duplex
• Triplex
• Fourplex
• Condo conversion
• Small apartment building (considered on a case by case basis)

I have two options for funding sources for small residential and commercial rehab projects.

Option #1: I have a lender that specializes in only funding rehab loans in nearly every state in the U.S. They make decisions fast and can fund in as little as 2 weeks. You can read their lending guidelines below.

Important: Because of the high foreclosure rate across the country and pressure on market values, the funding source has high qualifying standards for borrowers that includes having, at a minimum, decent credit, good debt-to-income ratios and plenty of liquid assets.

You will also be required to take title of the property as a business entity, not an individual, and provide tax returns and bank statements.

You should expect to pay 4 to 6 points for the loan as well as customary closing costs. These can be financed in the loan.

If you can work with the following lending guidelines, you can be on your way to flipping distressed property for fast profits. Send me an email to request a Rehab Worksheet to obtain a Pre-approval.

If the qualifying guidelines are too stringent for you, option #2 may be your best solution for raising money.

Option #2: Raising money from alternative sources such as a business line of credit or from private lenders.

I have written a White Paper entitled, Top 3 Ways to Raise Money for Real Estate Investing and Working Capital.

Click on the image below to grab your copy of the White Paper pdf file.




Here are the lending guidelines for the rehab funding source:

Lien position		First mortgage only
Business entity		Title needs to be in a business name such as an LLC, not in personal name. An LLC is easy to form prior to close of escrow
Application process		Complete a simple worksheet about the project details to be pre-qualified. If the project and your qualifications meet the lending guidelines, next you can complete an application to obtain conditional approval. The application fee is $395. Get a Conditional Approval in 24 hours of submitting your application.
Renovation funds		Renovation funds are usually advanced in one to three draws and wired directly to your account. Rehab portion of the loan typically not to exceed 150% of acquisition cost unless otherwise approved. Reserved funds are available for 12 months and can be extended to 24 months.
Buying and negotiating leverage		Once approved, you will receive a Proof of Funds Letter to use when you make offers and thus can structure your offer without a loan contingency for greater negotiating power and can close in as little as 2 weeks.
Loan terms		» 6 month term with monthly extensions to 13 months » 85% to 100% financing of purchase price + total project costs + loan costs up to $1,200 » 70% max ARV (After Repaired Value) » No payments for up to 6 months. Can be financed. » No prepayment penalty » Line of credit program for repeat customers » Can fund in 2 weeks from appraisal and docs
Borrower qualifications		» Borrower needs minimum of $20k in total liquidity for every $100,000 you want to borrow: bank accts, CDs, securities, cash value of life insurance, secured credit; unused home equity line or other secured credit lines (not included are 401k or other retirement accts) » DTI ratio (debt to income) not to exceed 50% » Credit score min 640 to borrow 85-90% of projected costs » Credit score of 657 to borrow 95% of projected costs » Credit score of 700+ to borrow 100% of projected costs
Document list		» 2 yrs tax returns – per and bus » 3 mo bank statements – personal and business » Current statements supporting liquid assets » Credit report » Purchase agreement » Summary of rehab work to be completed » Builder’s risk insurance » ARV appraisal - ordered by lender » Title policy - ordered by lender

States Currently Available for Rehab Loan		Not Available Yet
Alabama Colorado Connecticut California Delaware Florida Georgia Illinois Indiana Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri	New Hampshire New Jersey New Mexico New York North Carolina Ohio Oklahoma Pennsylvania Rhode Island South Carolina Tennessee Texas Utah Virginia Washington Washington D.C. Wisconsin	Arizona Arkansas Kansas Idaho Iowa Montana Nebraska Nevada North Dakota Oregon South Dakota Vermont West Virginia Wyoming