Please Tell Me!?!?!?!?!?

Is it at all possible to do a rehab without using any of your own money? I’ve been reading books on the subject, and they make the “No money down” seem simple. If this is possible could someone please explain? Thank you!!! :-\

Apparently, there are hard money lenders that will lend for rehabs if the numbers are good…

Try posting in the “Financing, Hard Money Lenders, Credit, Qualifying” area – that’s where the money folks hang out.

I buy right with cash, fix, get a new higher appraisal, cash-out refi, and hold with renters. So far, works for me.


Well, I don’t know about “No Money” but I am in to my first rehab with only $750 of my own money in to it. Details:

Purchase price: $86,500
Repair costs: $35,000

Total: $121,500

After repairs appraisal from HML: $177,000

Total they will loan: 70% of ARV= $123,900

Plus closing costs rolled in to loan: $2,400 +/-

So I came out pretty much even. I am half way thru the rehab and have spent more than my draws but I am also adding square footage and upgrades so it will also increase the apprasial at the back end.

The biggest thing I can tell you is just get out there and DO IT!! Find your local REI Club and talk to some investors. I won’t touch a deal if it doesn’t meet the following criteria:

ARV x 70% less repairs.

That will keep you in pretty good shape for success. It usually works out that you have to buy the property for about 50% of retail (ARV) but hey that’s the way it works.

Also, get a good spreadsheet from one of the books and USE it. As someone once told me - “Liars don’t figure and figures don’t lie” BUT - also remember not to get paralized by the analysis. Do the due diligence but don’t let the fear of the unknown scare you away from a potential good deal. Eventually you just have to jump in and the experience will determine how you proceed with the next one.

Good luck!

  • Rob

Digger, come on…you aren’t doing a HML with $2,400 in closing costs…the average HML closing fee is 4.5% and you left out the elevation certificate, flood insurance (if required) and casualty insurance coverage. And lets not forget the holding costs…at 11% MINIMUM…more than likely at 12.5%.

Monthly interest payments near $1,000…for a max period of 6 months - then jumping to a whopping 15%…real estate commissions of 6% upon sale. the potential for vandalism and propety loss on a vacant property - that is excluded from a Vacant Fire policy!

if you are already in excess of draws…this is going to get costly. If you want to exaggerate to your friends - go ahead…but Deanna needs to hear the reality of Rehabbing.

The real story on “no money down” is that it is does happen but rarely, even for a seasoned rehabber. Don’t tackle a rehab without thinking of all the things that could go wrong…and making sure you can cover them. red

I have wandered the same thing on rehab costs.

When you consider a property to rehab, what costs are there?

Scenario :

Fixer upper $65,000, needs $20,000 for repairs, Arv $120,000
Going conventional Mortgage at say 6%

What costs are there that I am missing ?

Closing? Taxes? Payments? Title?

What exactly is there when purchasing a home?

. As someone once told me - “Liars don’t figure and figures don’t lie”

I think you ment “Figues don’t lie, but liars can figure”

This is exactly what I do too. I started with a line on my own residence. I hate the refi process though – I don’t like to pay for money, but it goes with the territory. :-X

For the person asking what the costs are to purchase, in Georgia, with a cash buy you still have to come out of pocket for the attorney fees, title examination, closing fee, title insurance, recording fees, and my personal favorite, the joke of vacant property insurance (which covers about nothing). My last purchase this came out to approximately $1700. And I negotiated the seller pick up $800 of that. If the property is in a flood zone, you’ll add flood insurance too.

Then you need to add in an inspection fee – paid prior to close. Here $280, and then your deposits for utilities – after you close, another $250.

Then it’s time to get rehabbing :slight_smile:



Yes I really am telling you that the $2400 covered ALL of my closing costs (appraisal, insurance, etc…) Holding costs are:

$1800/ mnth note payment
$$60/ mnth utilities

I have purchased a majority of the materials on accounts with supply houses so there is a minimal charge there. Doesn’t matter - my draw is covering any current liabilities and I will pay the supply houses in full when I sell or refi. Other peoples money - that’s the whole concept here isn’t it?

I am not exagerating to anybody - friend or foe. I’m merely telling Deanna what I am doing. If you do something different - then more power to you.

So, I am still not using ANY of my own money other than the initial $750 I gave as earnest money.

The reality of rehabbing - it will cost you more than you expect, even with the best laid plans. That is the nature of rehabbing. It’s the unknown that will get you. And what makes you a success or failure is how you deal with it. If you can’t cover the increase in costs somehow (credit card, HELOC, whatever) then don’t do this because you will ALWAYS have an “OH SH*T” on EVERY project no matter how big or small it may appear.

DAN732: I hope you’re not calling me a liar just because I misstated a quote.

How about the 2 of you enlighting the rest of us as to your wonderful experiences. I was merely trying to relay my experience to someone who asked and all it seems that you want to do is cast dispersions.

How about it???

  • Rob

ok Digger…here is my formal response to your question. First of all i do about 6 rehabs a year. and i have been fortunate to have done only one that cost me no out of pocket $. Here are the details…house in very bad shape, needing roof and foundation repair among other things. HML appraised at $107K - my total available funds @ 70% were $74,900. i bought the house for $50k. this left $24,900 to pay closings and rehab. my SETTLEMENT charges were $5.682.68 (off my HUD-1). Settlement charges include; loan origination fee of $3,557.75; 6 months insurance @ $676.; document prep @ $161.00; Title policy @ $871.00; escow fees @ $255.00; recording fees @ $60.00; HOA transfer fee @ $100.00.
this left draws available of $19,217. i remodeled the house in total for $17,300. Unexpected AC work cost another $350.00. Have utilities to pick up, gas, water, elec. End of story…New appraisal came in at $121,000. New loan of $96,500 @ 6.44% 30 yrs. I pocket $16,000 after new closing costs. Tenants in paying $1,200 a month. monthly debt service $936.00 (with taxes). i have a newly remodeled rental that not only did not cost me any $ - but returned me $16k. i had no holding costs as i turned it into a rental quickly…if i had tried to sell it…i would have had to come out of my pocket for the montly interest charges. my HML can be found at by the way, did i read correctly that your carrying costs are $1,800 a month? are you paying 25% in interest? ouch! red