Real Estate Investor Rehab Loans
Get a Real Estate Investor Rehab Loan.
There is great opportunities for real estate investors in the market today. This is the best market for real estate investors in our lifetime. But unfortunately financing is not so readily available. There are options for financing purchase and rehab projects for real estate investors. Whether you are investing in commercial multifamily housing or residential investment properties there are lenders to finance purchase or refinance investor rehab projects. Since there is no secondary market for these types of projects your deals will fall into one of two categories. Your deal will either be a non conforming investor rehab loan or a hard money rehab loan.
Non Conforming Real Estate Investor Rehab Loan.
There is no such thing as conforming investor rehab loans. Conforming means there is a secondary market that will purchase these loans on wall street. The secondary market would the have established guidelines that all projects would have to conform to. Since this market does not exist the first category of loans are considered non conforming. Any rehab loan funded in this category will meet guidelines that are similar to conforming mortgages. Whether commercial or residential these loans would meet the guidelines as all other loans except they require major rehab and are investment properties. This means the borrower, real estate investor, would need good credit, verifiable income, an ability to repay the loan, acceptable down payment and reserves, and higher licensed bonded contractors to do the rehab. The advantage to the non conforming real estate investor rehab loans versus the hard money loans is that the rate and fees are substantially lower. The dis advantage is that there are many more qualification criteria and it takes longer to get the financing. But if you qualify and have the time it is to your advantage to take this loan versus a hard money real estate rehab loan.
Hard Money Loans.
Though the rates are much higher and the fees will be from 4% to 10% hard money loans could actually be more profitable to real estate investors than non conforming investor rehab loans. First of all these loans generally fund in 2 to 3 weeks. Secondly, the qualifications are much less and therefore you can do more loans. Truly you may qualify for a hard money loan when you will not for a non conforming loan. As such you have no option.
Qualifications of Non Conforming and Hard Money Investor Loans.
Both programs require you to purchase property where the after rehab value is 65% or less. Both programs require you to have an acceptable exit strategy. Non Conforming programs will always require a down payment of at least 20% of the purchase and rehab costs. Hard money loan programs may or may not require the down payment. Both programs will make sure the contractor or investor has the experience and sometimes licensing to complete the project. So if you have the experience, property, exit strategy and assets you can make lots of money by purchasing and rehabbing investment property.
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