Loan on deed for rehab

[Stacie Wall]

Have a second home looking to rehab to get full rent value. It's free and clear but my problem is my asking amount is either to low or the house only being worth $50k isnt enough. I just want the good ole collateral loan for $35k that doesn't seem to exist anymore.  I live in Missouri also which has also been a hender while the property is in rural Illinois along the Mississippi river. Any help would be great.

[Alex Breshears]

Hi Stacie! Just a few things I notice while reading your post that may be helpful.  First, is the property truly considered a "second home" because that falls under owner occupied territory, which likely you will find a lot of conforming loans, and yes that lower loan limit is very common in the conforming side of the house. Now if this property is just the second property you own, it will be purely an investment property, that has a wider breadth of options available to you, as it is not an owner occupied property.  Options there include the hard money loan you mentioned. My only hesitation with a hard money money loan would be how do you plan on getting back out of it if you can't find a lender to refi? Hard money loans are a short term bridge debt type loan, so either there needs to be the expectation you will pay this off within a year with X cash coming in or the property is going to be sold. 

There may be someone in your network that could act as a private lender for this type of deal. I know lots of small individual lenders that would have the capital to work in this loan amount area. Again, the timing will likely be the same issue as the hard money - these are going to be short term debt solutions, not a long term amortizing loan. 

I would personally start calling all the small local banks in that area of the home and asking about either a 1st position HELOC, and make it clear which option you are going with - it's a second home OR it's purely an investment property. That is going to delineate what their answer can be. Just start an excel sheet, get a google search going, and keep track of the names and numbers you have called. I've found some great loan products over the years just by picking up the phone and talking to people at various small banks that are local to the property. These institutions are likely going to keep the loan themselves as an investment for the bank, so their lending criteria is their own. You also are more likely to have a longer length offering for the loan, so less of an issue with repayment in 12 months.