Financing in Portland>Question Details

Kelly, Home Buyer in Portland, OR

Anyone know of a lender that offers rehab loans for a investment properties?

Asked by Kelly, Portland, OR Mon Jun 13, 2011

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7
Good Morning, Kelly,

There are two main loan programs that specifically finance the purchase and renovation costs in one loan. They are the FHA 203(k) Rehabilitation loan and the HomePath Renovation loan. There are huge differences between the two. FHA 203(k) is specifically owner-occupied dwellings only and allow for cosmetic as well as full renovation. The HomePath Renovation loan allows for Investors to purchase and renovate a property but the property must be an Fannie Mae REO eligible property..i.e., it must be designated as HomePath Renovation Eligible at http://www.homepath.com.

HomePath is a super loan program as it does not require mortgage insurance and the Investor Down Payment requirement is just 15%. The only downside is that it must be a Fannie Mae REO. Unfortunately, I do not offer this product and only a handful of lucky lenders do so. Locally, I believe just Umquah and HomeStreet Bank offer it. A Lender must have already been approved by Fannie Mae with a two-year history of Originating AND Servicing mortgage construction and home improvement loans. The Servicing requirement eliminates most Lenders from being eligible to offer the HomePath Renovation loan. Most Lenders offer HomePath purchase program financing but not HomePath Renovation. I hope that helps and good luck!
1 vote Thank Flag Link Tue Jun 14, 2011
Hi Kelly,

Traditional lenders often want at least 20-30% down for an investment property, and then you've got to use your own money for the remodel. Even 203k and HomePath expect you to be an "owner occupier" I believe. This is why most investors use hard money or private money lenders for buying investment properties. You can buy the house with a hard money loan, fix it up, and then refinance it with a traditional mortgage at lower interest rates, if you have decent credit and income, at least!

Some hard money lenders will roll the costs of the remodel in with the purchase, if you've found a great deal (less than 70% of after repair value, including rehab cost), but even then you will have to put at least 10% down (I do know of one lender who will do it with 5% down). The days when lenders were willing to take all the risks themselves are long gone, however!

I do know of at least one lender who will do a rehab loan (as a 2nd) under the right circumstances, and under the supervision of a licensed contractor. Part of this depends on your "exit strategy"... is this going to be a "flip" or a "buy and hold" property? If you're going to hold and rent it, you can use the hard money for 6-9 months while the property is being rehabbed, and then refinance with a traditional loan; for flips, you could use my specialty lender... their strategy works great for that! Call me for some references in the Portland area in either case...

Sharon Wenger, Avalar West Realty
(503) 686-1665
0 votes Thank Flag Link Tue Jun 28, 2011
You should contact David Labovitz at NW Mtg Group, he specializes in investor loan products & is experienced. His cel 503-515-8234, office 503-439-9191, email: dlabovitz@nwmortgagegroup.com

Good luck to you!
0 votes Thank Flag Link Mon Jun 13, 2011
Hi Kelly,

Sound Mortgage is a great resource for a wide variety of investment lending. Reno Warren is a great contact at Sound 360.513.2999
FairPlay Funding is also another excellent resource.
Web Reference: http://FairPlay.com
0 votes Thank Flag Link Mon Jun 13, 2011
How many homes have you rehabbed this year Kelly? That will be a big factor and once you hit a certain number it gets tricky. You'll have to go to a hard money lender then or someone else that is outside of conventional lending. Let me know more about your situation and I can better point you in the right direction.

Rian Muleback
Encore Realty
503-754-6717
rian@encorehouses.com
0 votes Thank Flag Link Mon Jun 13, 2011
Same answer Kelly. Give Eric a call or shoot him an email and see if he can help.

ERIC P. NEWMAN | P: 503.698.5801 | F: 503.716.4604
Senior Mortgage Banker
SKYLINE HOME LOANS
eric@gonwloans.com
Apply Online 24/7 http://www.GoNorthwestLoans.com/applyNow.html
MLO-97776 ~ NMLS-12072
10121 SE Sunnyside Rd, Suite 230, Clackamas OR 97015 - Corporate

Bonny Crowley
Broker/Owner Portland Principal Realty, LLC
503-784-0011
0 votes Thank Flag Link Mon Jun 13, 2011
Give Michael Neef at Big River Mortgage a call: 503-929-4615.
0 votes Thank Flag Link Mon Jun 13, 2011
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