- 1). Speak to a loan officer at your bank about a new mortgage loan on the property you have identified. Many rehab properties will not be eligible for traditional financing, but it is worth trying. If your property needs only minor repairs, it may qualify for traditional financing. This is the preferred method of financing if it is available.
- 2). Use your own money to purchase the property if you have it. It is optimal to pay cash up front and then you can refinance after repairs.
- 3). If you do not have the money to purchase the property by yourself, seek out a real estate partner. This can be done by finding an affluent individual who wants to make a good return on his money. You can find someone with funds in a self-directed IRA who can issue you a loan for the property in return for an attractive interest rate. You can also make this person an equity partner. For instance, you could offer to do all of the work in exchange for your partner financing the deal. You would give your partner the major portion of equity in the deal.
- 4). Get a hard-money loan. Find a hard-money lender by networking with other real estate investors at a real estate investor club meeting. A hard-money lender will lend based on the current value of the property. Beware that hard-money loans typically come with high fees and high interest rates.
previous post