Fix up loan

Robert, if you're buying a distressed property specifically to renovate and resell, you'll probably want to look at a fix-and-flip loan, hard-money loan, private lender, or local bank that offers investor renovation financing. These loans are different from traditional mortgages because lenders usually look at both the purchase price and the property's after-repair value (ARV). They may finance part of the purchase and renovation costs, but interest rates and fees can be higher because they're designed for short-term projects. Before borrowing, make sure you know your estimated purchase price, repair budget, expected resale value, holding costs, and selling expenses. The deal should still leave enough room for profit if repairs cost more or the property takes longer to sell than expected. I'd start by speaking with a lender who regularly finances investment or fix-and-flip properties and have them review the numbers before you make an offer. Brenda Ashby | REALTOR® | JohnHart Real Estate | DRE License # 01700249

What you're describing is essentially a fix-and-flip project, and the financing is usually very different from a traditional mortgage for a primary residence. For an investment property that you plan to renovate and resell, you can look into hard-money/private lenders, fix-and-flip loans, or other investor-focused financing. Some of these lenders will consider the property's expected value after renovations (ARV) and the renovation budget rather than simply qualifying you based on your personal income like a conventional mortgage. The tradeoff is that these loans can have higher interest rates, fees, shorter repayment periods, and sometimes a larger down payment requirement. You'll also need to make sure the numbers work after purchasing the property, renovation costs, financing costs, holding costs, closing costs, and the eventual selling expenses. Before borrowing anything, I'd build a detailed project budget. For example: Purchase price + renovation + financing + taxes/insurance + utilities + holding costs + selling costs = total investment. Then compare that against a realistic expected resale price—not the highest price you hope to get. I'd also keep a contingency reserve because older, distressed properties frequently have unexpected repairs. If this is your first flip, I'd strongly recommend talking with a lender who specifically handles investment-property renovation loans and a real estate agent who regularly works with investors. They can help you determine whether the property actually has enough margin to justify the risk. The financing is only one piece of the puzzle. The deal has to make sense before you buy it. Juan Picos Real Estate Agent JohnHart Real Estate

Robert, start with what will not work, because it saves you a couple of weeks. The two renovation mortgages everybody hears about, the FHA 203(k) and the Fannie Mae HomeStyle, are both wrong for a buy, fix and resell. The 203(k) is owner occupant only, so an investor cannot use it at all. HomeStyle does allow a one unit investment property, but it is a long term mortgage with a renovation completion window measured in months and it is designed for someone who is going to hold and rent, not for someone selling in ninety days. Keith and Mike both sent you toward hard money and they are right. Here is what to actually ask those lenders, because the terms vary enormously and the wrong structure eats the whole profit. Ask how they size the loan. Most fix and flip lenders lend against the after repair value rather than your purchase price, and they lend a percentage of it. Get three numbers in writing: the percentage of purchase price, the percentage of rehab budget, and the ceiling as a percentage of after repair value. Those three decide how much cash you bring to the closing table, and lenders quote them loosely until you make them write it down. Ask whether rehab money comes in draws and how fast a draw gets reimbursed. On a draw structure you pay the contractor first and get paid back after an inspection. If you do not have working capital to float a draw for two or three weeks, the job stops and your holding clock keeps running. Ask for the total cost of money, not the rate. Points at origination, the monthly rate, any exit fee or prepayment penalty, and whether they hold back an interest reserve. A loan that sounds cheap by rate can be expensive by the time you add points on a five month hold. Ask what happens at maturity. These are short term loans. Find out the extension fee before you need it, not the week you need it. Now one thing that will bite you on the sale side, and almost nobody brings it up. FHA will not insure a loan on a property being resold ninety days or less after you acquired it. If your likely buyer is an FHA buyer, and on an entry level house in Kansas a lot of them are, you have to plan your timeline around that or you will end up with a signed contract you cannot close. Cash buyers and conventional buyers are not blocked the same way, so it comes down to who your finished house is actually priced for. Last thing, and I say it as someone who has watched people learn it expensively. On your first one, build the rehab budget, then add a quarter to it, and estimate the hold time, then double it. These deals almost never go bad on the purchase price. They go bad on months of carrying cost nobody planned for. I am a real estate professional and not a lender, so every loan term above has to come from the lender in writing, not from me. I work in Los Angeles, so for the Winfield side of this, what the finished house actually sells for and how long it sits, find a local agent who has sold flips in that market and have them pull it before you buy anything. My name is Zoltan Peresztegi. Zoltan

Robert, you may want to look into a renovation loan, hard money loan, or other investor financing designed for fixer-uppers. Since you plan to resell the home, talk with a lender who handles investment properties and compare the interest rates, fees, down payment, and repayment terms carefully.

Robert, without knowing additional information, I would imagine you are referring to a Hard Money Loan. You would need to speak with one of those lenders to discuss your situation as a traditional Fannie/Freddie loan is probably not going to be applicable here. Keith Jean-Pierre Managing Principal The Dapper Agents Real Estate Operations in ALL 50 States

Ask your local lender about investor loans which typically require a decent size down payment. If you don't qualify but you have a slam dunk deal you absolutely must have search hard money lender near me. But be warned, the prices and closing costs are steep