There are lots of alternatives for funding purchase and rehab projects of real estate investors. If you are going to invest in commercial multifamily housing or residential investment properties, you can look for lenders that will pay for your finance purchase or refinance investor rehab projects. You will have to choose from these two types of rehab funding: non conforming investor rehab funding or hard money rehab funding.
Non Conforming Real Estate Investor Rehab Loan
Non-conforming real estate investor rehab loans do not have secondary market that will purchase the loans. Therefore, every non confirming investor rehab loan must satisfy the requirements of conforming mortgages. The borrower and real estate investor must have a good credit, a verifiable income, an ability to repay the loan, acceptable down payment and reserves, and higher licensed bonded contractors to do the rehab. Unlike hard money loans, the non conforming real estate investor rehab loans offer lower fees. On the contrary, non conforming real estate investor rehab loans have a long list of qualification criteria and you can?t get the financing immediately.
Hard Money Loans
Hard money loans have more higher rates that ranges from 4% to 10% hard money loans. In contrast with the non conforming investor rehab financing, these loans release the fund in 2 to 3 weeks time and they have lesser requirements. For this reason, you can apply for additional loans. But, you will be only qualified for hard money loans if you are unfortunate enough to have a non conforming rehab loan.
Qualifications to get Non Conforming and Hard Money Investor Loans
The two programs oblige you to buy a property that will have an after rehab value of 65% or less. They also require satisfactory exit strategy to pay the loan and check if the contractor or investor has the experience and license to complete the project. For non Conforming rehab financing programs you need to pay at least 20% of the total purchase and rehab costs while hard money rehab funding programs will or will not ask you for a down payment.