So you found a rehab deal in Bryan or College Station, Tx. And with the renovation costs and the after repair value, this property will turn into a nice profit. You probably can even set a price that will make for a quick sale when the rehab is at completion. There is just one thing holding you back – finding the money to purchase it! In recent times, it was fairly easy. You would pick up your phone and call your local lender. Sure, the terms were steep, but the financing cost was built into the equation. As long as all the number worked out, you could get funded. It was even pretty common to include the cost of purchase and repairs and have the interest financed right into the deal. If you did it right you didn’t need much, if any, of your own money.
Here we are and the easy money is gone. Don’t get me wrong, rehab loans can still be found, but things sure different than they used to be.
No money down? LOL!.
All costs rolled in? Try Again.
All repair costs included? Are you dreaming?!
These days the lenders want you to have significant skin in the game. Lenders have been burned in the recent past that they had to change the rules. The rehabber has to adjust, unless you are going to pack up and call it quits.
What to do?
Creative Financing!! Ever heard of a HELOC? A HELOC is a Home Equity Line Of Credit. If you have equity in your own home, try using that as a cash payment or even for the repairs and renovations costs. Many banks have been reducing the credit limits on existing HELOCs, so be careful. The advantage of HELOC’s is that it is YOUR money!! Pay it back and it is there to use again and again!
Can’t use a HELOC? Get even more creative. Get the current owners involved. Look for owners who are willing to hold a short-term note during your rehab. It can be done. Seeking out those individuals might be a little more difficult but you might be surprised! When people are in desperate need of selling, they will agree to all sorts of crazy terms. Try it, you’ll like it.
The point is to look for alternative or creative ways of making your deals happen. Instead of being defeated by: “it can’t be done”, ask yourself, “how can I do it?” Think outside the box. These are changing and challenging times. If you conform to the changes, you will succeed.