All Forum Posts by: Cian R.

@Andrew Postell the problem with basing the HELOC, or any loan, on the purchase price is that it was purchased at foreclosure for a 30% discount. And I need the same amount again to complete the renovation (100% of the purchase price or 70% of the pre-renovation value). That's what is making it tricky.

@Andrew Postell it will be my primary residence once the renovation is complete. It's a four-family but I will keep one of the units and rent the other three. 

@Kerry Baird @Andrew Postell

I spoke to six different lenders and I seem to be hitting the following roadblocks when it comes to a HELOC:

• 1. Property must be fully livable / already living there 
• 2. HELOC is based on the purchase price, not the appraised value, for the first 12 months following the purchase
• 3. Won't lend against a property held under an LLC (need to speak to their small businesses department)

It seems that a Rehab loan may be better suited for what I'm trying to accomplish. So I will have to start researching that route. As Andrew pointed out, this will mean that I only have to do one round of financing and not two (HELOC and mortgage). My first question is if they will do interest-only payments for the first 12 months with a 30-year rehab loan.

Thanks Andrew, I didn't realize that the 30-year renovation loan is based on the ARV. That would definitely seem to save me a step. Is there typically an option to do interest-only payments for up to 12 months?

One upside to doing the HELOC, if I can qualify, is that I can use it to help fund future projects after this current project has been paid down.

Hi all, does anyone have any experience with Rehab Loans? Are they more beneficial than a HELOC? I'm asking because my Lender suggested I go down that route seeing as I purchased the property only 60 days ago.

@Andrew Postell @Polo Vazquez 

Andrew, that was extremely helpful, thank you!

Hi Steven, were you able to secure your HELOC? I am beginning that process now and don't know where to start!

@Jon Schwartz I'm looking into taking out a HELOC to fund a BRRRR. After shopping around, who do you feel provided the best offer?

Hi Andrew,

That is a great question. I am considering simply taking out the 30-year fixed renovation loan now instead of doing the HELOC. But I ultimately want to take out a 30-year mortgage on the POST-renovation value. And my understanding is that the closing costs on a HELOC are substantially lower than a 30-year renovation loan. So rather than pay closing costs on:

1 - A 30-year renovation loan now

2 - A 30-year mortgage at refi post-renovation 

I would instead pay closing costs on: 

1 - A HELOC

2 - A 30-year mortgage at refi post-renovation

What do you think? Is there something that I'm overlooking?

Thanks Kerry! I could split the minimum monthly payment over two separate payments per month. And yes, that's great advice - the key here is to ensure that the DTI stays in balance.