Renovation Loan vs. Conventional

[Lester Hess]

I am just starting my real estate investing journey and am in the process of trying to find my first deal.  I'm looking for a property that we can renovate and then hold as a rental.  I've been looking into what different financing options are available.  My question is:  Assuming the home will qualify for it, does it make more sense to go with a conventional mortgage or to roll the rehab costs and purchase into a renovation loan.  Thoughts?

[Paul Welden]

One thing to consider is how much cash do you have on hand and are willing to use for the renovation. If it's a "substantial" amount and if using some or all if it for renovation will NOT cause any problems and you don't have better intended use for those funds, then paying cash for the renovations would be the cheaper way to do. 

Great thing about the renovations loans that the purchase and rehab money are all rolled into 1 single mortgage, which the tenant would essentially be paying for you. 

Depending on the potential cash flow of the property, it could make sense to do a renovation loan.