Restoration loan guidance

[Maddy Lakshmanan]

Looking to buy an investment property (40+ year) that requires significant repair 

Is it worth investing in such, or wait till I save money for a better house? What are the things I should lookout for ?

Are restoration loan more expensive than conventional loan ? can you suggest good lenders ? 

thanks is advance for the community to share your knowledge 

[Linda Garcia]

Hi Maddy! I haven't done any rehab loans lately, but in general, yes they are more expensive.  On top of an investment property having a higher rate and down payment requirement, a conventional construction loan will come with more points and fees due to risk.  The lender has to pay for inspections, title updates, loan servicing, etc that a typical loan doesn't have, and these are of course passed on to you. If you want to go with private money, the rate will likely be even higher but you might have less fees and restrictions on using the funds.  You would need to put some feelers out to some hard money lenders and see what they would be willing to give you based on your plan for improvements.  

You could also consider finding a property that is just dated but doesn't have anything that HAS to be done.  Then you can tackle a few of the most desired upgrades first, as your budget allows, and add more upgrades between tenants.