Financing a “zombie” house renovation

[John Pomponi]

Hello BP community! I’ve been listening to the real estate podcast and reading the forum daily for 5 years, but this is my first time posting.

I own 3 pre-1900 homes. I have restored two of them myself, paying for the renovations with my W2 job. All of them were “zombie” houses when acquired. I carry a mortgage on my primary and my in-laws are moving into the second home which I own outright. I vowed to my wife and in-laws that I would not leverage our properties to work on my investment portfolio.

I would like to hire a contractor to renovate the third home. I have had 3 estimates ranging between 120k and 140k for rehab. It is a 2,000 sq ft. 3/2 on 0.5 acre. The comps for the ARV are around 230k. I am currently in it for 20k and current value is 30k. I have 50k liquid earmarked for the reno, and I would like to secure another 100k to ensure that I have funding to complete the reno with the incidentals that are sure to arise.

I have a great DTI ratio and a credit score above 725, however, the 3 hard money lenders that I have reached out to will not lend more than the current value of a home for a renovation. Dealing with this "zombie" home which is going to require renovation 5 times its current value has been proving difficult for me to finance. I'm looking for short-term options for financing the renovation so that I can BRRRR it and start building a rental income portfolio. I sincerely appreciate any ideas or advice!

Thanks in advance!

John P.