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Rehab Hard Money Lenders typically finance up to 100% of the entire cost involved in the purchase of the property, fixing/construction costs, and closing costs for commercial and residential rehab projects.

Hard money rehab lenders typically fund up to 70% of the After Repair Value (ARV) of the property. Let’s assume that a property will have a market value of $200,000 after all the repairs in fixing it are completed. A rehab hard money lender will give a loan for $140,000(70%) based on ARV. If the property acquisition cost, repairs, interest reserve and closing costs fall below $140,000, the real estate investor basically has to put no down payment from his own pocket. In cases where the cost exceeds this loan amount ($140,000), the investor will need to come up the difference. Depending on the hard money lender’s rehab property underwriting guidelines, the LTV can be anywhere from 55% to 75%. To succeed in getting a hard money rehab loan, the real estate investor will need to find properties at a substantial discount to their after-repair market value.

The loan amount portion of construction and rehab/renovation costs are not directly handed over to the investor at the time of the closing. Draw requests need to be submitted on the work to be undertaken or completed based on the contractor’s estimate, depending on the lender’s procedures. The hard money lender might also inspect the project site periodically to assess the completed work.

During the duration of the construction, an investor typically doesn’t make the interest payment on their hard money rehab loan. This amount will be paid to the lender when the loan is paid off at the end of the term.

Residential Hard Money Rehab Lenders

Residential properties that have a maximum of four-units can be financed through hard money rehab lenders. Based on this, all Single-family houses, townhouses, duplexes, triplexes, condos and four-unit properties can qualify for these rehab loans. The zoning and property profile that matches these property types will have no problem getting qualified a hard money rehab loan. Investors looking to acquire & rehab bank-owned reo residential properties and foreclosures will find these lenders to be an invaluable source of financing.

Residential property investors looking for hard money will need to have decent credit as they need to refinance the hard money loan they used initially to acquire and complete their project. This condition is usually flexible when it concerns the single-family houses especially when the real estate market conditions for the locality in which the property is located are strong. But for multi-unit investment properties, having good credit gains more significance as they are difficult to refinance or sell after completion of renovation. Experienced investors with an established track record of completing the projects on time and repaying the hard money lender will find it easy to negotiate flexible terms.

The typical duration of a residential hard money loan is 6 months. As with other terms and conditions related to hard money lender guidelines, this can be negotiated.

Commercial Hard Money Rehab Lenders

Investors looking to get a commercial hard money loan to acquire, fix-up or rehab commercial properties can approach hard money lenders who fund commercial rehab projects. These commercial hard money rehab loans are a convenient way to do the renovations needed to bring the commercial properties to marketable condition. Like residential rehab hard money loans, the lenders will consider the after repair value property in deciding the loan amount.

Commercial real estate investors with experience fixing properties on time and within budget will be easily funded by commercial hard money rehab lenders most of time. These rehab loans can be utilized on most of the commercial properties including apartment buildings, multi-family, student housing, retail malls, office buildings, self storage buildings, hotels/motels, hospitals, medical and healthcare facilities.

The typical duration of these commercial hard money loans is 6 – 12 months depending on the project scope. These loans carry high interest rates, typically in the range of 12% – 18%.