Best REHAB financing options for rental property sale

Houston, Texas
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Best REHAB financing options for rental property sale

Robert Briggs
Member since 2025 · 1 post · 0 votes

Going to sell one of my rentals (Houston Area) and need to finance 30-40k and repay the rehab/ make ready loan after sale. 3-4 months . The property I'm selling has about 150K mortgage (250 ARV) and own another rental (230K (ARV) free and clear. Just seeing what the best option was to get cash for the rehab short term.

Cash out refi on the free and clear property doesn't make sense- has a min loan amount and all the fees (origination points ect) and appraisal ext.

Looked at HELOC on the rental, but is not allowed in Texas.

Will probably apply for a 0% APR CC for a lot of expenses/material , but still need cash for labor/ vendors.

Looked into personal loan , but 2 banks stated loan can not be used for investment property.

Personal loan through Discover was quoting 15.99% at 24 months . interest seems high

Any thoughts?

Private/ hard money lender? Personal loan , but tell them remodel for homestead?

Credit score around 790-800

Appreciate any incite.

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  • Andrew Zamboroski
    Lender · Member since 2021 · 498 posts · 131 votes
    1y
    Quote from @Robert Briggs:

    Going to sell one of my rentals (Houston Area) and need to finance 30-40k and repay the rehab/ make ready loan after sale. 3-4 months . The property I'm selling has about 150K mortgage (250 ARV) and own another rental (230K (ARV) free and clear. Just seeing what the best option was to get cash for the rehab short term.

    Cash out refi on the free and clear property doesn't make sense- has a min loan amount and all the fees (origination points ect) and appraisal ext.

    Looked at HELOC on the rental, but is not allowed in Texas.

    Will probably apply for a 0% APR CC for a lot of expenses/material , but still need cash for labor/ vendors.

    Looked into personal loan , but 2 banks stated loan can not be used for investment property.

    Personal loan through Discover was quoting 15.99% at 24 months . interest seems high

    Any thoughts?

    Private/ hard money lender? Personal loan , but tell them remodel for homestead?

    Credit score around 790-800

    Appreciate any incite.

    You may be able to refinance with rehab on the property you intend to sell. Although, costs will generally be higher on a rehab loan than a refinance on the free and clear property. It may also be difficult based on the figures you provided.
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  • Patrick Roberts
    Lender · Charleston, SC · Member since 2019 · 1k+ posts · 1k+ votes
    1y

    15.99% for an unsecured loan in this environment is more than fair. Your simplest option is a hard money loan or private loan against your free and clear property to provide the cash for the rehab. Expect to pay 1-3 points, probably $1,000-$2,000 in origination costs, and 10-13%/yr on the note rate. Most institutional lenders have min loan amounts around $75k. 

    This isnt a bad deal for someone with a SDIRA who wants to do a smaller loan amount. That's probably your best option. Either that, or 0% credit cards combined with the personal loan if you feel that you can liquidate the property before the credit card intro periods expire. 

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  • Wale LawalBusiness Member
    Real Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes
    1y

    @Robert Briggs

    Since a cash-out refi and HELOC aren't viable options in Texas, and personal loans have high interest rates, consider a few alternatives. A 0% APR credit card is a smart move for materials, but for labor costs, you might explore a private or hard money lender, especially since your loan term is only 3-4 months. Another option is a personal loan, but positioning it as a home remodel (rather than an investment property rehab) could improve approval odds. Given your strong credit score, a credit union or peer-to-peer lending platform may offer better short-term financing rates. If you need more guidance, DM me, and I'll point you in the right direction!

    Good luck!

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  • Jamie DietzBusiness Member
    Lender · Pittsburgh, PA · Member since 2015 · 176 posts · 90 votes
    1y

    I suggest you get a hard money loan on the free and clear rental.  Then use those funds for the rehab of the other property.   We have done this multiple times as long as both properties are rentals it shouldn't be no problem.   

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