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Renovation Loans for Real Estate Investors

Finding real estate investments is harder than ever. Inventory is tight, which means bidding on quality single-family rentals more often than not goes through the roof. As a result, investors may need to turn to renovation projects in order to make the numbers work on their next property purchase.

Whether they are buying fixer uppers to add to your portfolio, or looking for a property to flip and sell for a profit, investors need to know what type of loan they need to pursue to finance a purchase quickly and certainly. Otherwise, homeowners in a seller’s market will move on to the next offer, and the investor will be left in the cold.

Of course, investors need different loan options for renovation loans than homeowners do. A homeowner may choose FHA 203 k loans or a HomeStyle loan. They can also consider home equity loans in which they use the equity in your home as collateral for the renovations. They may look to a credit union or local bank for one of these home improvement loans, and they need excellent credit scores on a personal level to get the best interest rates and monthly payments. This lets homebuyers choose their preferred home improvements and pay a premium for the features most important to them, no matter what type of home they have or where it is located.

But investors can’t use home equity lines for renovation. Instead, they need loans designed for investors to borrow money for home improvements. They need to fit the budget to what renters or buyers in a specific locality will want, and ensure that the loan amounts both for property purchase and for renovations and rehab make sense in providing an after-repair value that will result in profit when they sell. If they decide to hold the property as a rental after renovation, a cash out refinance loan will allow the investor to turn the equity they create into cash they can use as leverage for the next renovation purchase.,

This means that renovations costing an arm and a leg won’t always make sense. Putting $500,000 of rehab into a $150,000 home rarely works; but a similar amount of rehab on a million-dollar home could result in major profit. The key is right-sizing renovation based on the potential sales price or potential monthly rental payment.

Financing renovation with a loan rather than credit cards or personal funds leads to monthly loan payments, but renovation loans from Lima One Capital are interest only, which makes them very affordable. When rolled into the cost of the overall renovation, the investor is able to assure cash flow through the renovation while still reaping profit at the end of the project.

If you’re looking for a renovation loan for a single-family home, duplex, triplex, or quadplex, Lima One is the answer. Our FixNFlip loans offer 13-month, interest-only financing, and we service loans in house and manage construction draws in house as well. This leads to a seamless process throughout the course of your renovation, and ultimately to the best chance of success. Inquire now to see how Lima One’s renovation loans for fix and flip investments can work for you.

Lima One Capital, LLC. NMLS ID # 1324403, 201 E. McBee Ave. Suite 300. Greenville, SC 29601. Lima One Capital, LLC is not currently licensed in AK, ND, NV, SD, or VT. Lima One Capital, LLC is licensed or exempt from licensing in all other states. Minnesota: This is not an offer to enter into an agreement. Any such offer may only be made in accordance with the requirements of Minn. Stat. §47.206(3). Lima One Capital, LLC is licensed in Arizona as a Mortgage Broker (License No. MB-0936439) and Mortgage Banker (License No. 949706). Lima One Capital, LLC is licensed as a California Finance Lender under Department of Business Oversight (License No. 60DBO-45834). Lima One Capital, LLC is licensed in Florida as a Mortgage Lender (License No. MLD1555) and Mortgage Servicer (License No. MLD1662). Lima One Capital, LLC is licensed in Oregon as a Mortgage Lender (License No. ML-5397). Annual percentage rate may be increased after fixed-rate period expires. Loans are subject to additional underwriting criteria.