How to Creatively Fund (and paying off) a Rehab

[Mike Waltman]

I've run into a roadblock. I've been seeing some houses that are fixer uppers requiring anywhere between $20-$40k in repairs but the purchase price is very attractive and would come out with lots of equity after the rehabs done. I've got private money at 8-10% interest or hard money at 12%. 

I'm trying to run the BRRR (buy renovate rent refinance) strategy. Securing the money for the purchase is no problem, and I could lump the rehab into that borrowed private or hard money but the issue is that when I go to refinance I will have to get a loan to pay back both the purchase and rehab costs. A loan that pays back both would mean the properties would still cash flow slightly but not really enough to make it all worth it.

If I didn't have to pay off the rehab with my refi and instead just refinance enough to pay back only the purchase cost these properties would be cash flow kings. 

Is there any way to creatively fund (and pay off sooner rather than later) a rehab without having to include the pay off into the refinance loan?

My initial thought was credit cards but adding on additional debt paydown + interest after a refinance with no way (at least I think) to pay it all off would kill cash flow for a long time.

[Dell Schlabach]

Originally posted by @Mike Waltman:

I've run into a roadblock. I've been seeing some houses that are fixer uppers requiring anywhere between $20-$40k in repairs but the purchase price is very attractive and would come out with lots of equity after the rehabs done. I've got private money at 8-10% interest or hard money at 12%. 

I'm trying to run the BRRR (buy renovate rent refinance) strategy. Securing the money for the purchase is no problem, and I could lump the rehab into that borrowed private or hard money but the issue is that when I go to refinance I will have to get a loan to pay back both the purchase and rehab costs. A loan that pays back both would mean the properties would still cash flow slightly but not really enough to make it all worth it.

If I didn't have to pay off the rehab with my refi and instead just refinance enough to pay back only the purchase cost these properties would be cash flow kings. 

Is there any way to creatively fund (and pay off sooner rather than later) a rehab without having to include the pay off into the refinance loan?

My initial thought was credit cards but adding on additional debt paydown + interest after a refinance with no way (at least I think) to pay it all off would kill cash flow for a long time.

How are they great deals, if after purchase, rehab and refinance they don't cash flow. 

Isn't that the definition of a nondeal? 

You seem to be asking, is there a way not to pay back the rehab money. Most lenders wouldn't like this very much :-)

Putting it on credit card and making monthly payments will likely make cash flow worse....

Am I missing something in you question?