A rehab loan is a loan used to make improvements to a single family home that is in need of repairs. Typically these homes are not eligible for conventional financing due to the amount and type of repairs needed.
We are able to loan up to 65% of the finished value of the home. We can also include payment reserves for you during the time of construction. This would increase the loan amount and would give you the added benefit of not making a payment while fixing up the home. Typical payment reserves are anywhere from 3 to 6 months. As long as the total loan amount falls within the 65% finished value we can include the purchase price of the property, the cost of improvements, the loan fees, and payment reserves.
If you own other real estate that has some equity in it then we can use that as additional collateral and loan you more then the 65% in some cases. The seller can also carry back a 2nd note and trust deed behind our new loan to help create the necessary equity needed for us to loan you up to 65% of the value.
Typically, we need the following to close this type of loan:
- A file on the borrower
- Digital pictures of the subject property
- Purchase and sale agreement on subject property
- Detailed list of all intended repairs to the property
- Cost break down of repairs including an estimated time frame of completion of each improvement
- Preliminary title report (We can order this)
- Either comparables of other properties recently sold around subject property or an appraisal establishing value of the property
We will have escrow hold backs for the repairs. We will release draws thirty days in advance for work and inspect the property afterwards confirming improvements have been completed and then issue the next draw repeating this process until the improvements are done.
Most rehab loans are 12 month terms. Rehab loans fund very quickly. Usually within 4 to 10 days.
today to take advantage of these investment opportunities.