Financing in Chicago>Question Details

John, Home Buyer in Chicago, IL

Investor rehab financing options

Asked by John, Chicago, IL Mon Dec 14, 2009

Does anyone know any rehab loan providers that service Chicago?

I have found Wells Fargo does investor rehab loans, at pretty reasonable rates (approximately one extra discount point and .50% higher interest rate thenconforming. There are also several smaller private money lenders that do rehab loans but their rates are very expensive (e.g. 4-5% discount points and a loan rate of 10-15%).

I have not been able to find any other large financial insititution that does investor rehab loans. I checked with many banks that did construction loans thinking they would be well equiped to do a rehab loan, but they all seem to refuse (they consider the collateral more risky then building from scratch). The one draw back I've faced with Wells Fargo is they limit an individual to one rehab project at a time; so if you wanted to pursue another project, you would have to find an alternate lender or wait until the first one is complete.

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I've changed companies since my last post in this thread. Those investor rehab loans above are still available and are being funded at very respectable rates once again (the last year+ the rates on them weren't very good). Typically speaking as of this post, there's a 0.5% rate adjustment, possibly with no points at all due to the current economic climate.

Feel free to contact me if you need assistance with transactions like this. Investor Rehabs, Fannie Mae HomePath and HomePath renovation (owner occ, second home and investment) and of course streamline and full 203k's if you're looking at buying a 2-4 flat and will live in one unit.
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1 vote Thank Flag Link Tue Dec 13, 2011
As a reminder, the investor rehab product I was referring to earlier requires a 20-25% project investment (at this time, this will likely improve at some future date) depending on the unit count with 30 year fixed rates available at 1-1.5% above market rates for non re-hab loans (that margin goes up and down depending on where we are in the economic cycle).

This is a loan you can keep.
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1 vote Thank Flag Link Tue Sep 21, 2010

As you previously have found, we do investor rehab loans at Wells Fargo. At this time, we're able to do them on 1-4 unit properties, mixed use (residential portion only) and condo's (high-rise or low-rise). I trust by now you've found one of my counter-parts who is adept in the product and has guided you thus far.

As the two previous posters noted, 203(k) loans are for owner-occupied residences only.

I wish you the best of luck with your project. Don't hesitate to reach out should anything major come up.
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1 vote Thank Flag Link Tue Mar 9, 2010

Sounds like you've found one of the only banks that will do a rehab loan and you're right, those terms are a bit high priced! Only because you didn't mention it; you have heard of the FHA 203k loan right? We have a number of investors taking advantage of this program which gives up to 35k for rehabbing. You didn't mention the scope of your project so this may not apply to your situation. If you haven't heard of it though, it is a good idea to work with a lender that has had experience in this type of loan as there are a number of extra steps for you and your mortgage person to take over a regular conforming loan and it's good to have someone with experience to help guide you through the process.
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1 vote Thank Flag Link Tue Dec 15, 2009
Try the guys over at Select Funding Chicago. Ask for Steve Wer. His number is (773) 919-3602

0 votes Thank Flag Link Mon Dec 12, 2011
You could try Community Investment Corporation, CIC or 312/258-0700 I think is the number
0 votes Thank Flag Link Tue Sep 21, 2010
Hi John - not sure if you were still in the market for a lender, but I specialize specifically in acquisition/renovation loans in the Chicago and surrounding Chicagoland area (mostly west Chicago and southside). We are direct lender, meaning that most loans close within 10-14 days. Our maximum loan-to-value is 60% of the future, after-repaired value. Interest rates are set at 1.5% per month (6 months of interest payments are financed into the loan proceeds), and origination averages at around 8%. The borrower's out of pocket costs include the appraisal fee and down payment (10% of the purchase price or $5,000 - whichever is greater).

Let me know if you or anyone needs any immediate financing. Rehab money is available. You can also find more information on our website at: Thanks.
0 votes Thank Flag Link Tue Sep 21, 2010

You are absolutly correct 203K loans are for owner occupied properties only all the way up to 4-units as long as you live in one of them.

Try finding a lender that offers the Fannie Mae Homestyle program. There are not very many but I would like to know if you find one.


David Cruickshank
0 votes Thank Flag Link Tue Dec 15, 2009
Unfortunately, FHA 203(k) loans can not be used for investor properties.
0 votes Thank Flag Link Tue Dec 15, 2009
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