150K needed to finish up Investment Home

[Saravanan Raju]

I and my contractor friend invested in a foreclosed home. Knocked it down and got the framing, roofing, plumbing done. We will probably need another 150K to finish the house. Title is free and clear of liens, no mortgage and is in both of our names, not zn LLC. Contractor already has built over 3 new homes and is experienced.

What's the optimal way to get the desired cash to finish the home.

[Clark Peterson]

A construction loan is probably the way to go. Feel free to DM me if you'd like to go into detail. 

There are generally four types of construction loans: 

- Construction-to-perm: this loan finances construction of a home and then converts into a fixed rate mortgage once the home is completed.

- Construction-only: a short-term, adjustable-rate loan that is used to complete the construction and afterwards the loan must be paid in full or refinanced into a mortgage.

- Owner-Builder Loan: Draws are made to the owner-builder, rather than to an approved third-party contractor. These loans are usually only available to owners who can demonstrate experience as a homebuilder and/or have a contractor’s license.

- Renovation Loan: it's like traditional mortgage. Renovation loans cover the cost of purchasing a home and performing major renovations. Because of this, the loan amount is based on the anticipated value of the home after renovations.