I am looking at the REI world as a future rehabber( rehab then sell) but as I do more research and reading I am becoming interested in the landlord (LL) business as well. But I don’t want to jump into the LL business until I have more capital built up.
My question is: when I do decide to become a LL, and I find a property that is worth rehabbing and turning into a rental property, what is the best way to finance it? Do I finance the original rehab deal with a LTV loan ( purchase + quite cost + rehab cost) and then once finished with the rehab do I refinance for a longer term of 15 to 30 year?
I am a newbie at this so any help will be appreciated. Thanks.
In general, one of the best ways to do it is to use cash or hard money for rehab purchase and fix. Then refinance at 80%LTV with a 15-30 year loan which should give you some cash out for your rehab plus cashflow with a tenant.
You can’t have one question without another one right?? So, what would the first hard money finance look like…hypothetical property- 3/2 1500sf, needs repair, selling for 45k, 10 other comps in the neighborhood are in between 110-120k.
It would take 45k for purchase, 15 for quite cost, 20 for rehab…with that said what are the the possibilities for financing the first time? Keep in mind my goal is to rehab and sell, and then to eventually rehab and keep for rentals. So I guess there are two scenarios huh? Sorry:)