All Forum Posts by: Account Closed

Your understanding is correct. You need to have some money to start the project. No need to have all. Then once you finish the first stage of work, you request a reimbursement. And then you have the money to continue the second stage, and third... until finish the whole project. People usually draw every month instead of just one draw at the end.

Hope this helps.

Yes, you can do that as long as each property is $75k above when you purchase them. It saves some closing costs when you do a blanket loan to purchase multiple properties.

Cross collateralization is usually used for short-term bridge loan with up to 70% combined LTV.

The best option would be finding a business partner to come up with the down payment together. Also, you'd better find a business partner who has apartment management experience if this is your first deal. Management 14-unit is totally different from management a couple SFH.

Hard money loan does not finance the down payment, they are first position lender requiring 20-25% down payment for stabilized property. What you meant might be private money loan. Private money lenders may give you down payment for either high interest rate or part of the equity ownership.

If just $20k to $40k, I wouldn't imagine it is a construction loan. A fix and flip loan should be a good-fit for you. The process is easy, you talk to a lender about your situation, he will give you a quote or suggestion. Then move to appraisal, documents collection and underwriting, then close, just like normal house buying process. For renovation cost, typically you can get 100% financing. It is a request and reimburse process to fund the whole renovation.

@David Alvarez For loan amount under $1m, you definitely can get 30-year fixed commercial loan. The down payment is usually 25%. For loan amount above $1m, it's hard to find a loan fully amortized. Usually there is a balloon payment at the end.

30 year loans for investment properties definitely exist. The loan should close to a business name, with interest rate about 5% and 2-3 points.

If the house is still in livable condition and just need light renovation, you may still qualify for conventional loan to acquire the property, but you may need to come up the rehab cost from your saving. If the house is not livable and you need financing for the rehab portion, hard money would be a very good choice because you can get a loan for 70-80% of the purchase price plus 100% of the rehab cost. The interest rate is around 8-12% and 1-3 points depending on your credit score, experience, and specific lender. The financing cost may seem high but if you run the actual dollar amount you may like it because there is no prepayment penalty. If you finish the renovation within 3-4 months, you only pay 3-4 months' interest.

Construction to permanent loans is actually two loans, with a short-term construction loan for your construction and then refinance to a long-term loan after construction. 

In terms of financing, if you have fairly good credit and experience with such project, you can get a short-term bridge loan to acquire the property and renovate it. But you are looking at around 65-70% LTC, plus the draw basis rehab. After renovation, you can gradually fill in with tenants, then refinance to a long-term 30-year fixed rate loan.