First Rehab
Got a quick question. I am looking into buying, rehabbing, and selling my first property. I currently own 3 properties, my primary and 2 rentals. The rentals have a good amount of equity in them but I would not rather touch that money if I don't have to, my question is, how do I go about getting a property with little or no money down, hold on to it for a month or two and sell it. I will be doing about 90% of the work myself. My other option would be to take out a line of credit from one of my properties, has anybody done anything similiar to this?
Jimmy
Find distressed properties that sell for under 80% of appraised value. You should be able to get a loan for 80% of appraised value and therefore no money down. You can also get construction loans from banks and interest only loans. Even if you can only finance for the purchase price, consider using your home equity line of credit to finance the 20% down payment and contruction costs while rehabbing. (This is the cheapest money available)There are lots of options out there. Talk to several bankers, esp smaller community banks who are hungry to loan money. You'll find a program that works for you.
Don't be reluctant to borrow against your equity.
Heck, that's what's it's there for.
If you were planning to use your equity to buy a big screen plasma television, surround sound and Playstation, then I'd have an entirely different reaction.
But using an equity line of credit for REI is a prudent decision.
Plus, if you pay down the line with the proceeds from the rehab sale, you'll instantly eliminate your debt.
I just used a $100K equity line of credit from Fleet Bank @ 3.5% to finance my last multi rehab/condo conversion.
Like I said, if you've got equity, use it.
Good Luck.
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i agree with m\f use your eq. it will be easier to make money arrangements with. it represents money no/m/down narrows your pick of choice props. as well........kenmax
I would opt for the line of credit. It will save thousands in closing costs and other hassles, especially on a quick rehab flip like this.
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