All Forum Posts by: Lina Vezzani-Katano

Hey Lina, 

Sounds like a fix and flip loan could work for you. Then you can refinance into a conventional (if you qualify) or DSCR loan. Best of all is that there are lenders that can finance 100% of the rehab costs.

By your own admission, if 80% of the property is uninhabitable with the remaining 20% requiring renovation to get it in any sort of livable condition and you went to a traditional/regular bank, the response you got from the mortgage officer is sort of accurate.

Regular banks do not typically make conventional loans on a property that is not habitable and most do not have products to address rehabs. You would need a specialty lender whose business focuses on financing rehabs who will in fact charge a higher rate than conventional due to the obvious risks.

So the mortgage officer doesnt necessarily have his or her facts wrong; might be they just don't have the solution that you seek.

Yes, you will need their permission because of the disturbance. If you are going to do extensive renovations. I think it would be best to wait until their lease is up. If they are month to month, you can give them a 30 or 60 day notice (depending on the length of residency) to vacate and then do the renovations. Is there a specific reason you want to add a 3rd bedroom while it's occupied?

Welcome to the BiggerPockets forums!

You would disturb the tenant's right to quite enjoyment by renovating the house and then you would essentially change the terms of their lease by adding another roommate to share the kitchen, bathroom, living room, parking, etc. If you are going to change the terms of a rental agreement, you need all parties to agree or you need to wait until the current lease expires.

Have a conversation with the current renters. If they're willing to accept the changes, go for it! If not, wait until their lease expires and they move out, then renovate and find new renters willing to pay the higher rate.