The real estate industry is broad. Property rehabilitation has become a common phenomenon and a lucrative opportunity for many investors who know how to do it. A commercial real estate investor takes up a rehab project to buy and renovate a property and then puts it back on the market for a profit. However, buying and renovating are two projects that need money. Acquiring a traditional bank loan can be hectic, and that is where the three rehab loan options discussed below come in handy.
Permanent Rehab FHA 203(k) Loans
This is one of the best options to finance a property rehab project. The Federal Housing Administration 203(k) loan has more extended repayment periods and lowers interest rates than other home improvement loans. The other great thing about this type of financing is that everything you spend on renovating the property goes direct int0o your mortgage payments. This eradicates the need to apply for different loans at a time. On the flip side, the total cost of the rehabilitated property must be less or equal to the FHA 203(k) loan you get. Additionally, it would be best if you dealt with a Federal Housing Administration-approved lender.
Hard Money Loans
This type of funding is wholly dependent on the value of the collateral you can afford. That is unlike acquiring a traditional loan where the lender checks your credit score before deciding to finance your rehab project or not. A hard money lender will be more willing to work with you, even if your credit rating is not as attractive, as long as the collateral you have is of tangible value. The processing time for these loans is short, but they come at higher interest rates and shorter repayment periods.
Line Of Credit (LOC)
If you want a financing plan that you can use repeatedly, Investment Property LOC is your to-go option. This funding works similarly to HELOC. The requirements to qualify for an investment property line of credit are a small debt-to-income ratio, property equity, and a good credit score.
Property rehabilitation can be a good business opportunity. Still, you may be required to acquire one of the three loans discussed above to facilitate the project. Feel free to contact BT84 Commercial Capital & Business Solutions today if you are looking for the best financial assistance for a property rehab project.