Best loan type for purchase & rehab? Land & build?

[Account Closed]

Hi all,

Would like to get a general idea of which types of loan products work best for different scenarios. When to use bank, when to use private or construction etc… Which offer best terms, most flexibility, trade offs? I am looking them up one by one but I would like a summary from people who have used them, what you liked/didn’t like about the loan product you used etc. I am interested in loans for house purchase and rehab and others for land purchase and new home build. Thank you for your help!

Renee

[Andrew Postell]

@Account Closed this is not intended to answer your question completely...I can think of about 80 different loans that could potentially fit in what you are asking....so explaining each at length would take a while....here's 3 quick summaries that might be able to help:

Using the BRRRR Method - We usually need a temporary, short term loan for the acquisition step in this process. The most common type is a Hard Money Loan (HML) since it will allow the least out of pocket (sometimes $0) when we purchase a property. Then when we are completed with the renovation process we REFINANCE (it's the 4th "R") we refinancing into the permanent, 30 year, fixed rate loan type.

Flipping - when you flip, you just use the HML to acquire and don't refinance.

New Build Process - In this scenario we are not renovating...but instead building.  So, the loans are different but the structure is similar.  Usually you need 20%-30% down to build, it is a loan that grows over time, and then you sell to your end buyer.  You don't refinance here either since you are selling the property. 

Hope some of that helps.