Funding multi-family Repairs

[Renee Stewart]

A friend of mine has inherited a 6-unit multi-family property that has been sitting vacant for 3 yrs. The repair estimate is approximately $30K. Any suggestions on how to raise/obtain these funds?

[Wendell De Guzman]

@Renee Stewart : as a private lender myself, here are ways for your friend to raise the money to rehab the multi-unit:

1. I assume this property is FREE and clear or it does not have a mortgage. If this is the case, pledge the deed as collateral to get a loan from a hard money lender or private lender for, say 50% of the value of the property (at 50% LTV, lenders like me would love to lend on deals like those)

2. You can also explore getting a conventional loan on it from a portfolio lender, again at a very low LTV. You might need to jump through hoops and credit is a consideration but you will get lower interest rates and lower points if you approach a portfolio lender

3. You can approach family and friends and get equity investment of say $3,000 each from 10 people to reach your target amount. Each of the 10 equity investors will own a portion of the property - better to do this through an LLC which owns, say 50% of the property. Of course, before you do this, you need to analyze your numbers and present them to those 10 investors.

4. You can also use crowdfunding - $30K is not a lot of money. If your friend's credit is good, you can borrow money from websites like lendingclub.com, prosper.com, etc.

5. You can use a HELOC if you equity in your home.

6. Your last resort, if you have good credit is get credit cards cash advances. However, do NOT use credit card advances if you can help it. The interest is higher than hard money loan.

Hope this helps.