Funding Rehab or Where do you find capital after your mortgage?

[Ryan Chatterton]

My wife and I feel super comfortable understanding the mortgage process but are tentative to jump into an investment before we understand how to fund all the rest of it (assuming our purchase will not be turnkey). Where do you find funding? Do you use your own cash? If so, how much? What if you are investing out of state and want to put in sweat equity? How do you pay for tools and materials? Do we need to buy a truck too? We've heard a great deal about getting INTO a deal but what about what happens immediately after closing? 

[Jody Sperling]

My wife and I rehab. We didn't know we loved rehabbing until we did our first rehab out of necessity. Also, we don't know how much we love every aspect of rehabbing. I've pulled and replaced toilets, pulled and replaced light fixtures, sheetrock, installed flooring, and she'd painted, scraped floors, installed a shower surround, and refinished tubs and sinks. All good so far.

We bought what we needed as we went along, and I'd strongly suggest you do the same. If you don't love rehabbing, don't do it just to save money. Yes, it will save you money, but the learning curve is steep, and you can make way, way more by learning to hire contractors and manage project flow.

As for the funding, if you have a great deal, and you can get money back out after rehabbing, use credit cards. We use credit cards, and we also use our HELOC. We have no liquid money outside of those two avenues, but we do have paid off property if we ever ran into an emergency. Determine the level of risk you feel comfortable with, and stick to it. Best of luck!