How to get renovations finances for Rental Property

Sacramento, California
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How to get renovations finances for Rental Property

Cathy Bui
New to Real Estate · Member since 2019 · 10 posts · 6 votes

Hi all,

I have a triplex rental property which I do not live in. I wish to do renovations on it. The lenders I've spoken to do not offer HELOC or home equity loans for triplex rental properties. I've only found cash out refinances but I currently have a good rate on my mortgage and don't wish to leave that. Can anyone offer ideas on how I could gain funds for renovations without putting too much of cash into it? Thank you all!

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Steve Vaughan
Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
3y
Quote from @Cathy Bui:

Hi all,

I have a triplex rental property which I do not live in. I wish to do renovations on it. The lenders I've spoken to do not offer HELOC or home equity loans for triplex rental properties. I've only found cash out refinances but I currently have a good rate on my mortgage and don't wish to leave that. Can anyone offer ideas on how I could gain funds for renovations without putting too much of cash into it? Thank you all!

In the past I've done as much work as I can myself and purchased materials on credit either through the stores or on credit cards.   
How extensive are you planning to go?  More than paint and flooring?    I've refinished tons of wood floors,  cabinets and countertops for inexpensive upgrades as well.  
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  • Jason WrayPro Member
    Banker · Nationwide · Member since 2020 · 2k+ posts · 1k+ votes
    3y

    Cathy,

    It's tough as a new investor to digest losing a low rate in order to take cash out through a refinance. You need to evaluate the burn rate and the equitable positon you will be in (ARV) after the renovations and repairs on top of the future growth by having a better crub appeal and higher construction rating.

    Even though you have a low rate do not let it stop you from using the equity through a cash out refinance.  Because you can do a couple of things to get back to that low rates down the road.  You can take advantage of a rate buydown during the cash out refinance.  You can also wait 12-24 months when rates start to drop and also do a rate buy down to get back to the original rate.

    The rate buy down pays for itself over time and the cash allows you to gain more passive income through higher rents or a down payment for another home.  Maybe consider taking out enough for a small down payment and renovations so you kill two birds with one stone!

    [email protected]727-637-4289
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  • Steve Vaughan
    Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
    3y
    Quote from @Cathy Bui:

    Hi all,

    I have a triplex rental property which I do not live in. I wish to do renovations on it. The lenders I've spoken to do not offer HELOC or home equity loans for triplex rental properties. I've only found cash out refinances but I currently have a good rate on my mortgage and don't wish to leave that. Can anyone offer ideas on how I could gain funds for renovations without putting too much of cash into it? Thank you all!

    In the past I've done as much work as I can myself and purchased materials on credit either through the stores or on credit cards.   
    How extensive are you planning to go?  More than paint and flooring?    I've refinished tons of wood floors,  cabinets and countertops for inexpensive upgrades as well.  
    1Reply
  • Olivia Grabka
    Property Manager · Leominster, MA · Member since 2022 · 103 posts · 50 votes
    3y

    @Cathy Bui. How much money do you need? If its less than $30k and you have good credit, get a personal loan from the bank & use your profits from the rental to pay it off. The cash out refi is your other option, but the interest rate will cut into your profits more than the personal loan option. A HELOC option is available, I know TD Bank will do it, but they do a cross collateralized loan across everything you own.

    0Reply
  • Frank Greg
    Lender · rate.bid · Member since 2022 · 324 posts · 62 votes
    3y

    If this is for an investment property, you certainly want to look into the private funds route.

    1Reply
  • Jared RineBusiness Member
    Lender · Sacramento, CA · Member since 2009 · 1k+ posts · 277 votes
    3y

    @Cathy Bui..where is the property?  Is it in Sacramento?  How much do you need for renovations?   Will doing renovations create more value/equity in the property and allow you to increase rents?  I'm interested to hear more.  PM if needed.  Thanks,

    Jared Rine United Lending Partners53 Reviews
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  • Eliott Elias
    Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes
    3y

    Borrow the money from a private investor. 

    0Reply
  • Stephanie P.Pro Member
    Washington, DC Mortgage Lender/Broker · Member since 2016 · 4k+ posts · 2k+ votes
    3y
    Quote from @Cathy Bui:

    Hi all,

    I have a triplex rental property which I do not live in. I wish to do renovations on it. The lenders I've spoken to do not offer HELOC or home equity loans for triplex rental properties. I've only found cash out refinances but I currently have a good rate on my mortgage and don't wish to leave that. Can anyone offer ideas on how I could gain funds for renovations without putting too much of cash into it? Thank you all!


    Credit cards. Personal loans. HELOC on your primary residence. All of those would work.

    0Reply
  • Cathy Bui
    OP
    New to Real Estate · Member since 2019 · 10 posts · 6 votes
    3y

    I didn't know about the private loans option. That is interesting to me! I also never thought credit cards should be considered based on financial advice outside of real estate investing so it's interesting to know that some of y'all advice credit cards. I could see how if a renovation is done quickly, it's a good option! I'm looking forward to investigating further and seeing others weigh in.

    0Reply
  • Sam Bader
    Lender · Chicago, IL · Member since 2019 · 21 posts · 0 votes
    3y

    Hi Cathy, is this property in a business name or personal name?  If it is in a business name I may be able to offer funds to help with the remodel... Let me know thanks

    0Reply
  • Cathy Bui
    OP
    New to Real Estate · Member since 2019 · 10 posts · 6 votes
    3y

    @Sam BaderAt the moment, the property is under personal name. You're the second person who mentioned eligibility based on business vs personal name ownership. Perhaps I should consider switching it from personal to business.

    0Reply
  • Erik EstradaBusiness Member
    Lender · Member since 2022 · 6k+ posts · 1k+ votes
    3y

    Hey Cathy, 

    They just released a second mortgage option on non owner occupied residences. You can do both full doc and bank statement only. 

    CLTV is up to 75% (1st + 2nd) on bank statement only

    CLTV is up to 80% (1st + 2nd) on a full doc loan

    Maximum Loan amount is $450k, terms are 10,15 yr, 30 yr fixed fully amortized loan. 

    [email protected]818-269-7983
    LuxePrivate Investments LLC 572 Reviews
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  • Tony Guarino
    Member since 2021 · 27 posts · 17 votes
    3y

    Hey Cathy, 

    I see a few people here mentioned credit cards. I have financed several renovations and capital projects on interest free credit cards (One for 12 months, one for 18 Months). I went to the bank who I set up a personal account with and asked if they had any promotional offers. 

    I always paid them down during the interest free period, but definitely something to ask your local banker. 

    Best of luck! 

    0Reply
  • Peter Brown
    Member since 2022 · 35 posts · 10 votes
    3y
    Quote from @Steve Vaughan:
    Quote from @Cathy Bui:

    Hi all,

    I have a triplex rental property which I do not live in. I wish to do renovations on it. The lenders I've spoken to do not offer HELOC or home equity loans for triplex rental properties. I've only found cash out refinances but I currently have a good rate on my mortgage and don't wish to leave that. Can anyone offer ideas on how I could gain funds for renovations without putting too much of cash into it? Thank you all!

    In the past I've done as much work as I can myself and purchased materials on credit either through the stores or on credit cards.   
    How extensive are you planning to go?  More than paint and flooring?    I've refinished tons of wood floors,  cabinets and countertops for inexpensive upgrades as well.  

     LOL...I thought I was the only one who DIY's :)  My challenge has been to get out of the DIY mindset to be more an investor and less an amateur contractor. 

    1Reply
  • Nash Mittelman
    Real Estate Agent · Bay Area · Member since 2022 · 25 posts · 19 votes
    3y

    Are you going to sell it? Compass Concierge is a great way to pull out cash, and you can pay it back at 0% interest when you close on the deal if you were looking to sell.... 

    0Reply
  • John Carbone
    Realtor · Gatlinburg · Member since 2020 · 1k+ posts · 957 votes
    3y
    Quote from @Erik Estrada:

    Hey Cathy, 

    They just released a second mortgage option on non owner occupied residences. You can do both full doc and bank statement only. 

    CLTV is up to 75% (1st + 2nd) on bank statement only

    CLTV is up to 80% (1st + 2nd) on a full doc loan

    Maximum Loan amount is $450k, terms are 10,15 yr, 30 yr fixed fully amortized loan. 


     Is this only California? Are there population density limits? I’m in the smokies. 

    0Reply
  • John MorganPro Member
    Rental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votes
    3y

    @Cathy Bui

    I do my rehabs with zero interest for a year credit card convenience checks from Citi. They give me up to 25k with a 3% processing fee. 3% for a year to borrow 25k helps me immensely. I’ve opened up a few new credit cards that gave me 0% for up to 12-18 months as well. That bought me enough time to pay them off. And I’ve done a few 401k loans up to 50k for rehabs. Then I pay these all off asap and repeat. I’ve also opened up a consumer line of credit with my credit union for 25k. The interest rate is high. But sometimes you need 25k on a moments notice to rehab or buy a new rental if a great deal falls in your lap.

    0Reply
  • John Carbone
    Realtor · Gatlinburg · Member since 2020 · 1k+ posts · 957 votes
    3y
    Quote from @John Morgan:

    @Cathy Bui

    I do my rehabs with zero interest for a year credit card convenience checks from Citi. They give me up to 25k with a 3% processing fee. 3% for a year to borrow 25k helps me immensely. I’ve opened up a few new credit cards that gave me 0% for up to 12-18 months as well. That bought me enough time to pay them off. And I’ve done a few 401k loans up to 50k for rehabs. Then I pay these all off asap and repeat. I’ve also opened up a consumer line of credit with my credit union for 25k. The interest rate is high. But sometimes you need 25k on a moments notice to rehab or buy a new rental if a great deal falls in your lap.


     I’ve done this as well, but since rates have gone up I haven’t seen the offers like this. Are you still seeing these offers?

    0Reply
  • John MorganPro Member
    Rental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votes
    3y
    Quote from @John Carbone:
    Quote from @John Morgan:

    @Cathy Bui

    I do my rehabs with zero interest for a year credit card convenience checks from Citi. They give me up to 25k with a 3% processing fee. 3% for a year to borrow 25k helps me immensely. I’ve opened up a few new credit cards that gave me 0% for up to 12-18 months as well. That bought me enough time to pay them off. And I’ve done a few 401k loans up to 50k for rehabs. Then I pay these all off asap and repeat. I’ve also opened up a consumer line of credit with my credit union for 25k. The interest rate is high. But sometimes you need 25k on a moments notice to rehab or buy a new rental if a great deal falls in your lap.


     I’ve done this as well, but since rates have gone up I haven’t seen the offers like this. Are you still seeing these offers?

    Yes, Citi keeps sending me these offers. But instead of a 3% processing fee, I’m seeing them charge a 5% processing fee. So you’re basically getting a 25k loan for 5% interest for a year. Not great, but not bad. 
    0Reply
  • Sam Bader
    Lender · Chicago, IL · Member since 2019 · 21 posts · 0 votes
    3y

    Hi Cathy, I've figured out a way to get you the funds without changing the real estate to a business name.  If your interested you can DM me...

    0Reply
  • Jason Bowden
    Member since 2023 · 57 posts · 27 votes
    3y

    Hey Cathy, you're probably looking at going the personal loan route. How much do you need for renovations? 

    0Reply
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