So you want to do a rehab. You’ve got a private lender lined up. But how does the lender give you the money for the rehab work? Can you get all the money (to close and do the rehab) up front? Or are those two things handled separately?
Hey Moguls, Patrick Riddle here, and I get this question from investors a lot – and today I’m going to address the answer in detail in this lesson.
Are you ready? Then let’s go.
The Short Answer… and an Exception
With private money, you can structure loans so that you receive all the cash you need to do the deal when you close.
That’s how I’ve done every rehab deal, with one exception: I had one lender who was a little skeptical because it was a larger renovation. So for that particular deal, he wanted the loan structured so that the renovation budget was paid out in three draws.
I don’t remember the exact specifics of the structure, but I’ve always been one who will bend over…
Patrick Riddle
has been investing in real estate ever since he got the bug in college at Clemson University and - to his parents dismay - dropped out of college to dive full-time into real estate at the age of 22 with a couple friends/partners from school.
The first few deals were rough for them, mainly using their own cash, credit, and hard money loans. But, soon he found out that was a rough and unsustainable way to build a real estate business.
After "on the job" learning through the school of hard knocks at first, he found the key that helped their company get deals done more quickly, with higher profit, less risk, without having to go to banks or use their own cash.
Fast forward to today, their company has closed over 130 real estate transactions and has put over $6 million in private money into their own transactions.