Ready for my 1st house flip / or Rental property

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Ready for my 1st house flip / or Rental property

Chris Castillo
Orlando · Member since 2021 · 3 posts · 1 vote

Hello, My name is Chris and I am new to real estate investing in Florida. I was able to fix up my credit ( currently building it up ) and save up some money for a 5% down payment for anything less than 200k. I looking for some guidance as well as I have a question. My questions is...... 

Once I have interest in a property and I gain either a private lender or bank lender for a purchase on a property , What can I do for Money in regards to the rehab of a property along with closing fees/ inspector / etc. ? 

So as a 1st time investor , I am asking How i am able to get the $ for rehab without going into my own pockets?

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Abel CurielBusiness Member
Real Estate Agent · Queens, NY · Member since 2016 · 2k+ posts · 1k+ votes
5y

@Chris Castillo

Great question!

One route to strongly consider would be to connect with an investor-friendly lender about a rehab loan (i.e. 203K loan) which will allow you to finance your renovation costs. This way, you minimize your up front investment and force appreciation with the same loan you're using to finance the property.

If there is enough 'meat on the bones' for the deal, you may be able to finance your closing costs.

Lastly, if the deal is good enough AND you're working with a great Realtor, you may be able to negotiate closing costs as part of the deal. If you're looking in Orlando, Tampa or surrounding Central Florida areas, I'd recommend you reach out to @Steven Torres.

Best of luck to you moving forward!

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  • Abel CurielBusiness Member
    Real Estate Agent · Queens, NY · Member since 2016 · 2k+ posts · 1k+ votes
    5y

    @Chris Castillo

    Great question!

    One route to strongly consider would be to connect with an investor-friendly lender about a rehab loan (i.e. 203K loan) which will allow you to finance your renovation costs. This way, you minimize your up front investment and force appreciation with the same loan you're using to finance the property.

    If there is enough 'meat on the bones' for the deal, you may be able to finance your closing costs.

    Lastly, if the deal is good enough AND you're working with a great Realtor, you may be able to negotiate closing costs as part of the deal. If you're looking in Orlando, Tampa or surrounding Central Florida areas, I'd recommend you reach out to @Steven Torres.

    Best of luck to you moving forward!

    REbuild Team - eXp Realty5234 Reviews
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    3Reply
  • Scott WolfPro Member
    Lender · Boca Raton, FL · Member since 2014 · 1k+ posts · 957 votes
    5y

    @Chris Castillo, what @Abel Curiel said is 100% right.  There are tons of loans out there made to help you.

    @Matthew Porcaro is a 203K specialist.  If you need a loan officer recommendation, feel free to reach out.

    1Reply
  • Jonathan GreeneBusiness Member
    Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes
    5y

    203k loan is the way to go, but from what you've said so far, I don't think you are ready to take on that project. Even though the loan is paying for the rehab, you still need to know the repair costs on your own, the budget, the timeline, the process. I would connect with 203k lender, have them explain the process, and then talk to some 203k contractors to get an idea of if they are doing these jobs now. 203k contractors have to front the payments in quarters, which is easier on smaller jobs, but they might be swole with larger jobs right now.

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  • Steven Torres
    Real Estate Agent · Orlando, FL · Member since 2020 · 42 posts · 25 votes
    5y

    Hey @Chris Castillo!

    I agree with @Abel Curiel. I will definitely get in contact with an investor-friendly lender first, then I will connect with contractors, which all of these contacts are in house.

    Best of luck!!

    1Reply
  • Shawn McCormickPro Member
    Realtor · Central Florida-Orlando · Member since 2014 · 1k+ posts · 892 votes
    5y

    Hi @Chris Castillo seems everyone agrees that 203k (for FHA) or Homestyle (for conventional loans) would suit you well. Depending on what you are going to do with the property (live in it, house hack, flip, turn into a rental) those are fine options.

    Other ideas would include looking for private money (there is SO much out there that people are looking to put to work!), hard money (only for short term needs and be prepared to make sure your deal has room for the extra costs of this), or if you know someone with a Roth, SD IRA, HSA, they can loan the money out. I do this with my SD IRA for smaller projects exactly like what you need. I loan the money to you, you complete the project and pay me back..all of it goes back in my IRA and I did almost nothing and you got your money at a reasonable rate. One caveat is that I could not be involved whatsoever in the project..I can't suggest a paint color, swing a hammer or recommend a contractor. But it is a great option and also puts you in touch with other people with money, expands your knowledge of structuring deals and allows you to do more of them.

    A good start for you would be to join the local REIA (CFRI.net) and start networking with other local investors.

    I would be happy to chat if you like, message me if you would like to talk.

    Good luck and welcome to BP!

    1Reply
  • Chris Castillo
    OP
    Orlando · Member since 2021 · 3 posts · 1 vote
    5y

    Thank you so much , and yes I am not ready yet . But planning ahead so I at least know what I am getting into and how I can manage. This just helped me become eased and is benefitting the plan I am creating. 

    0Reply
  • Paul Welden
    Real Estate Agent · Tempe, AZ · Member since 2011 · 1k+ posts · 543 votes
    5y

    FHA 203k loan is a great option for buyers who will live in the property as their primary residence for a min of 1 year.

    Fannie Mae Homestyle is another great option for owner occupants as well as investors. 

    Freddie Mac CHOICERenovation is another conventional rehab loan for owner occupants and investors (but only for 1 unit properties). 

    All these options allow you to include the purchase price + rehab $$$ into 1 single close loan. 

    These loans allow you to get up to 6% of the purchase price (FHA 6% and Conventional 3%) from the seller to help pay for your closing costs.

    0Reply
  • Richard Mose
    Rental Property Investor · Las Vegas, NV · Member since 2020 · 1 post · 0 votes
    5y

    @Chris Castillo I'm new myself but to my understanding you could get a loan to cover the whole thing. From a bank or from hard money lenders. I'm attempting to get a hard money loan now that will give me up to 75% after repair value to purchase the property and do the rehab. Good luck!

    0Reply
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