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Updated about 2 years ago, 11/10/2022
Rehab Funding Exhausted....Alternative funding
Hello BP,
What are some alternatives for additional funding if you've exhausted your rehab project funds?
#4 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
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- Austin, TX
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#4 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
- Investor
- Austin, TX
Ask for more
You can reach out to your current lender that is providing you the funds, and ask for additional funding. They may say no, and they may also say yes and charge you a bunch more for it.
Additionally, depends on your access to other capital. Do you have other assets you can leverage? Do you have other investors you can borrow from? Can you give equity away to someone in return for the remaining funds needed to finish the project up?
Bottom line, if you already own the project and it cant be sold (or rented) until the project is completed, you go to do whatever it takes to finish the project up and move on. If you are in this business for the long run, then one deal is nothing compared to the bigger picture.
Quote from @Tarl Yarber:
You can reach out to your current lender that is providing you the funds, and ask for additional funding. They may say no, and they may also say yes and charge you a bunch more for it.
Additionally, depends on your access to other capital. Do you have other assets you can leverage? Do you have other investors you can borrow from? Can you give equity away to someone in return for the remaining funds needed to finish the project up?
Bottom line, if you already own the project and it cant be sold (or rented) until the project is completed, you go to do whatever it takes to finish the project up and move on. If you are in this business for the long run, then one deal is nothing compared to the bigger picture.
Thanks Tarl.
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#5 All Forums Contributor
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I'd also say roll up your sleeves, you gotta learn sometime. Home Depot and Lowes will give you lines of credit or CCs, a while back, I got my cabinets for $15k at Lowes and got 5% more off. The cabinet guy walked me up to the Customer Service and kinda made it happen.... :-)
If you can get $10k from both of them and another $10k from your bank (personal loan), than throw in your own labor worth $10, that's $40k. Hopefully you're not over by more than that?
#4 Mortgage Brokers & Lenders Contributor
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#4 Mortgage Brokers & Lenders Contributor
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Quote from @Jay Charles:
Hello BP,
What are some alternatives for additional funding if you've exhausted your rehab project funds?
You have to evaluate what made you go over your budget and either adjust the scope of work, do some of the work yourself if you're able and then like others have said, get alternative funding like credit cards. If you're using credit cards, make sure you're either getting cash back or a discount on the purchases.
@Jay Charles
This probably depends on what’s left to get done. Almost every project has a surprise or two that you didn’t budget for. That’s where the contingency fund comes in to cover unexpected issues. Sometimes your 10%-20% fund is not enough. Definitely sweat equity is always an option.
Provided there is enough equity in the deal you could look for private lending. The only issue where will the private lenders lien position be. I have been able to have private lenders in second position, but it takes a great relationship for them to be comfortable or use another property as security.
Last time I ran into this, I just told my bank and they gave me a personal loan. It was a pretty high interest rate, but the plan was to pay it off in less than 3 months, which we did.
You could also look into credit cards with 0% introductory rates. Just make sure you pay them off....
Billy Daniel hit it on the head! Unsecured financing is quick and easy with no restrictions on uses as well as the Business Credit Lines / Cards. If you're diligent about paying them off they're a no-brainer usually. Ask your bank first, they'll be best rates usually. Otherwise there are alternative options in the marketplace as well!
Quote from @Jay Charles:
I swear to god Jay, if I can do it ANYONE can. Especially today with all those youtube videos. There's no excuse. Unless you make so much obscene money, and it's cheaper to hire out.
