Do you borrow money to do a rehab project?

[N/A N/A]

I'd like to get a rough idea if most people use cash to cover rehab expenses, or if they take out a loan/credit card/2nd mortgage/etc.?

Just another non-scientific poll from me :whistle:

[Ben Carmona]

Originally posted by "Pam Hudson":

I'd like to get a rough idea if most people use cash to cover rehab expenses, or if they take out a loan/credit card/2nd mortgage/etc.?

Just another non-scientific poll from me :whistle:

For those that are just starting off or working on larger rehabs paying cash for the complete project may not be an option.

Most local banks (at least in this market) will not do 100% financing unless a track record has been established. In addition, banks, along with conventional mortgage lenders may have debt to income ratios that many investors can not meet.

I recommend that investors who have scenarios such as above consider using a hard money lender. They usually can fund up to 100% of the purchase + fix if within 65-70% of the after repaired value. The loans are short term with no prepays. LTV, ability to repay, a good exit plan, and experience are more of a factor than credit scores.

Once the project is finihsed, a no seasoning cash out refinance can be done to pull equity out, if your goal is to retain as a rental.