Get The Financing You Need For Your Next Rehab Project
For a successful rehab project, not only do you need funding, but you also have to access it quickly and at reasonable rates. Once you have estimated how much the rehab will cost you, from labor to materials, it is easier for you to analyze various rehab funding sources and approach the one that best suits your needs. Discussed below are ways you can finance your next rehab project.
Hard Money Loans
They are short-term loans (can last between six months to a year or two) from private investors. The short period makes them have high interest rates compared to traditional mortgages. And in case you have credit issues, you are likely to pay an even higher rate. What attracts people to hard money loans is how easy it is to qualify for them and get them quickly. While taking these loans, you need to have a solid plan to flip your rehab project promptly. That is why they are most suitable for any investor with knowledge and experience in fixing and flipping.
Equity in Your Primary Residence
The two ways to use the equity in your primary residence are either a home equity loan or a cash-out refinance. A home equity loan is just like a second mortgage. For instance, you already have an existing mortgage, but you still use the same residence to secure a second mortgage to invest in another property. There are investors who choose a home-equity line of credit (HELOC) instead of taking a lump sum, especially if they often invest in rehab projects. A cash-out refinance is when you opt to replace an existing mortgage with a new one but under different loan terms.
Any investor with a rehab project about to sell but comes across another opportunity too good to resist opts for a bridge loan to fund the new project. In short, the loan bridges the gap between buying a new property and selling an existing one. A significant disadvantage is the high interest rates due to their short-term nature.
If you are looking to finance your next rehab project, you can explore the above options and see which one suits you most. Have you come across a good deal that you do not want to let go of and lack the funding? Talk to Summit Commercial Capital and see how they can be of assistance.