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Investor Rehab Loans  

What is the Investor Rehab Loan?  

An investor rehab loan is a type of financing specifically designed for real estate investors who purchase properties in need of repair or renovation. These loans provide funds not only for the purchase of the property but also for the necessary rehab work. The primary goal is to help investors improve the property’s condition and, consequently, its market value, enabling them to sell it for a profit or rent it out at a higher rate.



Types of Investor Rehab Loans 

  • Hard Money Loans (Fix & Flip) 
  • Private Money Loans 
  • Bridge Loans 

 Key Features of a HomeStyle Renovation Loan:

  • Short-Term Financing: These loans are typically short-term, often ranging from 12, 18 or 24 months. Designed to be paid off after the property is sold or refinanced. 
  • Property Condition: These loans are geared toward properties that require significant repairs or updates. Traditional lenders might not finance such properties due to their condition, but rehab loans are specifically for this purpose. 
  • Loan Structure: The loan usually covers both the purchase price of the property and the estimated cost of the renovations. Funds for the rehab work may be disbursed in stages as the work progresses. 
  • Higher Interest Rates: Because these loans are riskier, they often come with higher interest rates compared to traditional mortgages. 
  • Down Payment Requirements: Investors typically need to make a larger down payment, which could range from 10% to 30% of the purchase price. However up to 100% of the renovations can typically be rolled into the loan, depending on the loan program. 
  • Exit Strategy: Lenders usually require a clear exit strategy, such as selling the property after rehab or refinancing into a long-term mortgage. 

Benefits of Investor Rehab Loans 

  • Financing Both Purchase and Renovation Costs: Investor rehab loans cover both the cost of purchasing the property and the expenses related to its renovation. This allows investors to manage all their financing needs with a single loan, simplifying the process and reducing the need to secure multiple loans. 
  • Quick Access to Capital: With speedy approvals and disbursement, these loans, especially hard money loans, are known for their quick approval process. Investors can access the necessary funds faster than with traditional financing, enabling them to act quickly on time-sensitive deals. 
  • Flexible Terms: Rehab loans often come with flexible terms tailored to the needs of the project and the investor’s strategy. Lenders may offer interest-only payments during the renovation period or structure the loan to align with the anticipated completion and sale of the property. 
  • Potential for High Returns: By financing both the purchase and renovation, investors can significantly increase a property’s market value. This creates an opportunity for substantial profit when the property is sold or refinanced. 
  • Leverage for Larger Projects: These loans allow investors to take on larger or more complex projects than they might be able to fund on their own. With a rehab loan, investors can leverage other people's money to complete more extensive renovations that could lead to higher returns. 
  • Minimal Personal Capital Requirement: Although rehab loans often require a down payment, they reduce the need for investors to use their own cash for the bulk of the project costs. This allows investors to take on multiple projects simultaneously or allocate their capital elsewhere. 
  • Improving Investment Portfolio: Rehab loans allow investors to build equity quickly by improving distressed properties. This not only increases their net worth but also strengthens their investment portfolio, making it easier to secure future financing. 
  • Diversifying Investment Strategies: Investor rehab loans can be used for various types of properties, including single-family homes, multi-family units, and even commercial properties. This allows investors to diversify their portfolios by taking on different types of rehab projects. 

Borrower & Guarantor Eligibility 

  • Limited Liability Company (LLC) 
  • Limited Liability Partnership (LLP) 
  • Limited Partnership (LP) 
  • Corporations 

Entity Guarantor 

All entity members with ownership are required to sign a personal guarantee; at least one individual with ownership is required as a Qualifying Guarantor 

Summary: 

Investor rehab loans are a powerful tool in helping investors purchase, renovate and either flip or hold real estate. We work with both first-time investors to the well-seasoned investor to help them meet their goals.