What is the best way to finance rehab costs?

[Dwight Cook]

Hello everyone,

I am currently looking into buying a property that needs some work done on it. I haven't seen the property in person but I will be seeing it in the next day or two. especially because my last deal didn't end up working I have really high hopes for this one. this will be my first purchase if all goes well!

My goal is to BRRRR this property.

The property is listed at $39,900 but I am going to offer $30,000. I'm estimating the ARV to be $100,000

at this price, I am assuming that it is going to need $20-25,000 in repairs but obviously I will know more once I actually see it.

I have $40,000 in savings so I can afford to purchase the house and pay closing but the repair costs are a different story.

my goal is to refinance this house 6 months after purchasing it but I will be cash flowing enough that if I have to wait longer to refi it won't be the end of the world. what is the best way to fund the repairs on this? (I will not be living in the property) I have a $12k credit card limit (last resort) I also have $7k I can pull from my retirement fund at 1.5% interest.  

I'm thinking at this point a personal loan might be my best bet but I would love to hear about any less expensive or more practical ways I can finance this.

[Jason Bohling]

@Dwight Cook I’ve seen $50,000 a few times (that’s what my buddy got) and have heard of a friend of a friend (so take that with a grain of salt) who got $90,000 for his. What’s available to you is going to depend on your personal financial situation and credit.

I would recommend looking at any banks/credit unions you currently have a relationship with, followed by credit unions in general, then banks in general. The relationship is what really helps in this kind of situation, that’s why it comes first and credit unions tend to offer the best rates, which is why I recommended that second. When the bank extended that line of credit to him, the reason they ‘ overlooked’ it per say for debt-to-income purposes on the refinance is because they knew the refinance was going to be repaying that and it would be a non-issue afterwards..

If you're wanting to shop around for what's available, something I did when I got my HELOC was I went on my state's website (pretty much every state has this) and I found the list of all credit unions and banks that are authorized to do business in the state. I then printed that off, created a basic spreadsheet on Excel and just started calling them and used the data to help me find the best one.