Funding a remodel options???

Question

I recently purchased a small multi family property. 2 units were turn key and they are rented. 1 unit I am funding the rehab for and that is almost done.

But there is a separate building with 2 unfinished 1Bd 1Ba apartments. My estimate is that it will take between 50-75k to get them both rent ready.

I wanted to see what everyone's thoughts were on financing the rehab? I do not have enough cash to fund everything, and I don't think there have enough equity in the home to take some money from there. Hard money is definitely an option but does anyone have any other possibilities to explore?

Jimmy Suszynski · Answer

@Davis Stoner

I did this on my first BRRRR. I used a personal loan with terrible interest for the purchase and two 0%-for-18-month credit cards for the rehab.

I factored the principal and interest payments into my overall numbers on the deal and it worked

When I refinanced 6-mos. later, I paid it all back and am now in the deal for less than $1,000 and bring in cashflow (NET) of ~$180/month.

I would make sure you will be able to recover that 50-75k following renovations. If you got the place for a great deal you should be fine. Worst-case, your tenants pay your credit card bill(s) until you are able to refinance or otherwise.

Jason Shackleton · Answer

Taking out one card by yourself is simply that. There are companies that apply on your behalf to numerous major banks all at the same time. By doing this and leveraging their connections they can stack up approvals for clients allowing them to access multiple credit lines (credit card stacking). There is a fee that the lenders charge for this service. The fee varies per lender. Most come with the 12 month 0% apr you mentioned. I hope this helps. It's a strategy not many talk about.

Davis Stoner · Answer

@Jason Shackleton Thanks. Thinking of taking out a credit card and financing that way. Can probably get a promo 12 month 0% apr card. Is that what you’re referring to, “credit card stacking?”

Davis Stoner · Answer

@Brendan Miller Thanks Brendan. Unfortunately this is my only property. I’m going to explore other lines of credit.

Jason Shackleton · Answer

Hey @Davis Stoner You mentioned not having enough equity in your home to complete the job so a refi likely won't do the trick this time. With hard money I don't think many lenders fund just the renovations on properties that are already owned. They usually lend off ARV when you purchase. I don't know any lenders that will do this post purchase but I have heard of it being done before. Perhaps a short term loan from a family member would work.

A unique option may be to consider a (ULOC) unsecured line of credit. Better known as credit card stacking. It's a credit based product that comes with credit card rates when used. It can fit for small and fast renos 20k-40k or so taking 2-4 months or so. Then when the job is completed refi the renovated property and pay off the ULOC to a 0 balance. This trick can work well for some. I have always had access to these types of credit lines. Although I barely ever use them. It's always good to have.

Brendan Miller · Answer

@Davis Stoner do you own a primary residence with equity in it? if so, you could do a HELOC against that to fund your rehab, and then refi that property once your rehab is complete. Similar to hard money, you could also look at private lender options (family, friends, or partners).

Funding a remodel options???

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