A good real estate investor needs to consider few facts for sure while making a property deal. Well! As a matter of fact you are able to get different types of loans from your private money lenders but you need to select the kind of investment that interests you. Rehab Loans are definitely the greatest choice for all the new entrants in the field but you need to know about the difference in two types of this loan category. There are funds you require for purchasing the property for rehabilitation and selling purposes. You need funds for the actual repairs and renovation.
You need to focus on the kind of houses you need for rehabbing and you can get 100% financing for the actual investment. So you need to know about the right kind of private or hard money lenders that are going to fund you the Right Funds. But the 100% financing is subject to so many conditions especially the choice of a right property. It means choosing a right deal for a property that is going to pay enough of profit after rehabbing. Private Money lenders are not going to give you Rehab Loans for the entire amount that you have estimated on any property. Suppose! You are buying a property worth of $ 100,000, and it needs 20,000 on the repairs and fixations. So this $20,000 is the After Repair Value of the asset.
Now you want to get rehab loans from a good private money lender then you need to deduct the rehab cost out of the actual amount needed. So your lender would give 50-70% of that $80,000. It is actually the Adjusted After Repair Value (AARV). So your funds would be relative to the AARV. There is another question in your mind as if you are going to get the full 70% on the property that is worth little less than that. Then it is for sure that your private money lender would only lend you the required amount and nothing extra. Being a Real Estate Investor, you need to arrange the extra money for the repairs and rehab. Then you can ask your friends or relatives for the remaining amount of money. You can also use the credit cards or the home depot card for the arrangement of remaining funds.
Rehab Loansare for purchase of property from wholesale market and then there is a great need to do necessary repairs over that same property. You need to see focus on different kinds of repairs that are necessary and then the important fixtures needed in the house. You need to follow the latest trends in the market and to get an idea of what your potential clients need in a house. Your amendments would result in great rise of property and you can benefit from the market facts of it. Rehabbing would cost you all benefits of making a sound profit and to reinforce your decision of being a proper and professional real estate investor.