Many People ask this question that how does a rehab loan work? With Private Money Lenders, you can come to know about its exact meaning. If you have any question or query about these loans, Call us Today 435-565-1769 for getting more information regarding Rehab Loans. http://privatemoneyutah.com/how-does-a-rehab-loan-work

1. How Does a
Rehab Loan
Work?

2. With so many foreclosures
and short sales out there in
need of repairs, buyers of
these properties often ask
us,

3. “How does a rehab loan
work?” Most of our clients are
real estate investors who are
buying distressed properties
and using rehab loans to get
them looking good again.

4. Many real estate investors
have the same question,
“How does a rehab loan
work?”

5. Because each private money
lender who offers a rehab
loan program has a different
program, we will highlight the
most common hard money
rehab loan in our discussion
here.

6. Because a property is always
more valuable after it’s been
fixed up, a hard money rehab
loan is usually given based on
the value of a property after
the fix up.

7. For example, if you buy a
property for $150,000 but it
will eventually be worth
$215,000 once it’s all fixed up.
The value of $215,000 is the
ARV or the after repaired
value.

8. But how does a rehab loan
work in this case?
Most bank loans are given
based on a percentage of the
purchase price and not on a
percentage of the After
Repaired Value.

9. How does this differ from a
rehab loan? Most rehab
lenders will lend on a
percentage of the After
Repaired Value and will give
you a loan for 60% to 65% of
the After Repaired Value.

10. Hard money rehab loans are
by far the easiest loans to get
for real estate investors who
are buying and selling
investment properties. They
can usually fund in less than
14 days,

11. but the interest rates are
typically a lot higher than
bank interest rates. Expect to
pay 11% to 12% interest only
on a hard money rehab loan.
The loan term is usually 6
months to 1 year,

12. and you have to expect to pay
a loan fee as well. The loan
fee is typically 3% to 5% of the
loan amount for a rehab loan.
Let’s do a quick example of
how a rehab loan works:

13. A foreclosed property needs
work and is under contract to
buy for $138,000. The
property needs new
appliances, flooring, paint,
etc. It will cost approximately
$15,000 to repair

14. the property and get it ready
to resell. Once the needed
repairs and upgrades to the
property are completed, the
property should sell for
$190,000.

15. The buyer could get a hard
money rehab loan to
purchase the property. If the
lender gives the buyer 65% of
the After Repaired Value of
$190,000 he could get a loan
for $123,500 towards

16. the purchase price of
$138,000. The buyer closes on
the property using the rehab
loan to purchase it. The
monthly interest payment is
$1,380 based on a 12%,
interest only rate.

17. The buyer puts in $15,000 to
repair the property and sells it
in 120 days. The rehab loan
gets paid off when the
property sells. It’s that
simple!

18. If you have any questions
about how our rehab loans
work, no question is a dumb
question. For more info, click
here, or submit an inquiry at
this link:
http://privatemoneyutah.com/contact-2

19. Click here for more
information.
http://privatemoneyutah.com/how-does-a-rehab-loan-work