Financing your real estate rehab project with no skin in the game

There is a new program for real estate investors that can provide as much as 100% financing for rehab projects.

Just to be clear, I provide financing to real estate investors in MA and NH, not to homeowners.  A typical project would be a house in disrepair, whether a bank owned REO or a property that had deferred maintenance for whatever reason.  This program is not for homeowners.

The investor buys the property, and invests significant money in rehabbing the house to make it ready for resale to an end buyer.  Frequently, they use a hard money loan to fund the purchase and rehab budget.  A significant down payment is required, because these are properties the banks won't finance, and the loans are considered risky.  The downpayment can run from 15% to 30% of the purchase price.

So what does the investor do when they don't have that large downpayment?  Sometimes it is their first rehab project, or sometimes they have taken on multiple projects as once and don't have enough cash for all of them.

A new program is available that can provide up to 100% of the purchase and rehab costs.  It is local program and available for properties in parts of Eastern Massachusetts only.  In summary, in exchange for the lender providing all of your downpayment, you will share 25% of the profit in the deal, and pay a fee of $2900, in addition to interest and points.  I have posted the details on my website.

• Is this expensive?    YES!
• Does it help to solve the issue if you don't have lots of cash or collateral for the downpayment?   YES!
• Can it get you started in rehabbing?   YES!
• Could it work even for experienced investors who have their funds tied up in other deals?   YES!
• Are there cheaper ways to fund a deal?  HECK YES!  But use what works in each situation.

The program isn't appropriate for every project.  There are LTV limits of 70% of After Repaired Value, and if the profit is low, it will be lower after you pay 25% to the lender.  But check out the terms if your rehab project is in Massachusetts, and run the numbers.  It just might work for you.