When you go to start your next rehab project, one challenge you are likely to face is how to fund your project. There are quite a variety of ways that you can fund your next rehab project, including some of the following:

All Cash Funding:

If you have made enough money on your last rehab projects or have extra cash sitting around, this is the best way to pay for the property that you wish to purchase. Cash is always considered king in the real estate market. When you close you will simply bring the exact amount of cash needed for the transaction in order to purchase the property. In many cases, you might find yourself wiring the funds to the closing agent rather than physically carrying paper cash into the closing deal.

Conventional Mortgage:

Using a conventional mortgage to purchase an investment property is another option that many investors choose. These mortgages come from state or federally charted banks and are taken from more conventional lenders. Rehab loans are rare to find, but conventional mortgages can sometimes be used to help you with your next rehab project. These loans take longer to obtain, so if you choose this route, be prepared to be patient.

Government-Insured Loans:

The Federal Housing Administration (FHA) does offer rehab loans through its 203k loan program. If you qualify, you can use these funds for your next project. You can even purchase multifamily condos and units if the owner resides in one of the units on the premises. You must be purchasing a property that was owner-occupied and not just something from an investor.

Owner Financing:

You can use your property to “loan” yourself money in order to be able to make investments into your own rehab project. You can pay back the money in installments once an agreement is reached between both parties. Buyers find this favorable as the seller’s fees are usually lower than the fees of a financial institution.

Hard Money:

Hard money lenders do not look at the creditworthiness of the buyer, but instead they look at the value of the property to ensure that the property will cover any sorts of defaults if the buyer fails to pay. These hard money lenders can lend up to 50-60% of the total value of the property in most cases.

Private Money:

Private lenders often review the potential borrower and identify collateral that they need to put up in order to get a loan financed through them. Private lenders are often interested in the money being paid back as they may be able to lend you more money than some other types of lenders.

These are some of the ways that you can find your rehab projects in the future. If you have any questions, please feel free to contact us for more information. We are always here and happy to help!