Rehab Loan for a Duplex?

Question

Hi I am looking to buy my first property in Columbus Ohio. We are trying to focus on duplexes, but with our budget (about 150k) and the market we can not find anything in our price range that cash flows that does not needs a total rehab. I am happy to take on a rehab but I have been calling banks to see if they provide rehab loans for a duplex and can not find any banks that do conventional mortgages that will give a rehab loan for a multifamily. Does anyone know of a bank in Columbus that gives rehab loans to duplex properties? Or any other options? I did talked to a commercial lender who will but I am not sure and a little confused about the interest rates ballooning after 5 year.

Any Help or suggestions would be much appreciated.

Thank you!

Any Help or suggestions would be much appreciated.

Thank you!

Bob Green · Answer

Ryan,

We provide acquisition and rehab lines of credit based on 5X your liquidity including retirement accounts. The line is revolving and can used over and over again as you pay it down or off. If you have $150,000, we may be able to set up a line for $750,000.  Credit, experience and liquidity determine rates, and lending structure. PM me for more information.

Max Gradowitz · Answer

Conventional lenders will likely not lend on purchase + rehab (like a FHA 203k type of loan) for a non-owner occupied property.  Some hard money lenders will.

Owner occupied rehab loan programs include FHA 203k may in theory work for a multi-unit but keep in mind they are very complex and long processes, require expensive lender-required contractors, and of course you have to live in it.  I can imagine most lenders would not want to do such a thing on a multi-unit because underwriting will likely not believe you will really occupy the property.

Ryan Deeter · Answer

@Tyler Delbert Thanks for your help and I must clarify  that I meant I was looking to buy our first investment property.  We do currently have a loan for our current home.  Is this program only for your first mortgage?

Tyler Delbert · Answer

@Ryan Deeter, ask about the FannieMae HomeStyle Renovation Program. It’s a new program, but sounds like it’d work great for what you’re trying to do. You can go up to 85% LTV for a two-unit principal residence.

Alex Deacon · Answer

@Ryan Deeter with a commercial loan its very normal for the loan to adjust every 5 years. If you do it right you will buy at a good price then add value with your upgrades and repairs and get the value of the property up significantly. Then you can pull out all the cash you have into the project when you refinance. Then start over again.