HML options

What are my options to finance my rehab? I have very good credit (high 700’s), but basically live paycheck to paycheck. Very little to no liquid assets. I am interested in a few REO with tons of equity, but no cash to finance and rehab the deals. Any advice would be great.


Most Hard Money Lenders will require you to make monthly payments. There are a few (or there used to be) who would allow you to roll payments into the loan; however, you will then be paying interest on interest. If you do not have the ability to make monthly payments, you may want to look into assigning properties and build up some cash reserves.

Aside from being able to make payments (several lenders do still allow for payments to be rolled in), you’d still need some liquid assets for working capital and reserves. Hard money lenders that base the loan on the ARV will give you the money needed for rehab work. However, these funds are not advanced out, only there for reimburesement of work completed and inspected.

You may want to look for more of a private lender/individual to in your local area to help out.

Hmmmm… okay, thanks for the suggestions/info. How about if I were interested in a home going to auction that needed to rehab? How I could I use a HML in this scenario? I believe this particular auctioneer needs about $2K deposit if you have the winning bid and the remainder by the end of the day. Is there any way I could use a HML to acquire these properties? How so?

I know I am pulling at strings here - just trying to evaluate my options and educate myself at the same time.

Thanks guys. :beer

If a home is going to auction, you may not be able to inspect it before you put in an offer. A lot of expensive suprises come up. Contact a local HML. Look for ads in the yellow pages/ newspaper that say " Investor loans" “Rehab loans” “No- Doc Investor loans” These are clues that the broker deals with HML’s. Then you can get their exact requirements. If you need to save money before getting into this, do it. Ask yourself some questions before you jump into this.

  1. What’s your market like in your area and why?
  2. What’s your rehab experience?
  3. How much time can you devote to this ( you need to be there a lot).
  4. What’s your target property criteria?

You should not be “pulling at strings” when it comes to investing. That suggestsy you’re more eager/desperate as a buyer. Perhaps you should wait to gather some liquid reserves and education regarding rehabs. This way you can enter from a better position overall. Good luck. :beer

You will be hard pressed to find a HM lender that is going to fund a property in auction—the majority of them want to have a subject to appraisal (which is difficult to in an auction setting).


Scott Miller