Rehab Loans — Fix Up That Dream Property With a Trusted Lender
What is a Rehab Loan?
A rehab loan is a kind of home improvement loan. It might be needed if the property you are looking to purchase requires renovations, repairs, or remodeling before it can be inhabited and/or rented out. Rehab loans are a type of short-term loan that helps buyers or investors with the funding needed to make repairs to get the property up to code and proper condition to be lived in.
The Loan Process
When looking to get a rehab loan the process is essentially the same as any of our other loans. There is the application, assessing the value or repairs needed, the closing, the disbursement of funds in installments, and the money-making begins.
- Application. Interested parties begin by filling out an application on our website. Print the application and mail or email it directly to us. We review the application within 24 hours and return your call almost immediately.
- After Repair Value. This is when we conduct a market value analysis on the property. We look at pertinent data—like recent sales in the area—to help value the property. With our access to Multiple Listing Service, we can pull comprehensive market data to value the property for a good estimate of what it will sell. Once we establish that price, Entrust is able to lend 70% of that After Repair Value (ARV) at closing. For example, if the property is said to be worth $100,000 we will loan 70% of that ARV.
- Site Visit. Once we have conducted the ARV Analysis, we will issue a Pre-Approval letter. This approval letter is subject to a site visit by Entrust Capital Funding. At this time, we will begin by examining the home. We will revise our evaluation, either up or down, due to factors like the neighborhood, condition of the property, unknown features, etc. We will also look at the property and make an assessment on how much we feel the repairs will cost. After the site visit, we will issue a Final Approval Letter, in which the final amount we will bring to closing, as well as how much we will keep in escrow for repairs.
- For Rehab Loans. If the property requires rehab funds as well, Entrust will tag that on to the entire loan and disburse the repair funds in increments as soon as repairs begin.
- Closing. The only upfront costs associated with a hard money loan from Entrust Capital Funding is $400.00 to open up the title and draw up the loan documents. Entrust Capital Funding has the ability to close files within 7 days, as we have the funds readily available, as long as the title is clear. All closing costs are the responsibility of the borrower.
- Renovation. Once the property closes and funds, the borrower can begin the work of renovating the property. Entrust Capital Funding holds funds for repairs and will distribute those funds on a predetermined repair draw schedule. For example, if the property requires $10,000 in repairs, we would structure our draws as $2,000 for exterior renovation and $8,000 for interior repairs. Once you feel that the exterior repairs are done, contact us and we will go and inspect the renovations. We will not tell you HOW to renovate the property, but we will make sure the all the renovations are done completely and to code. If we see the exterior is completed, we will disburse the $2,000 to you. Once the interior repairs are done and we have inspected those repairs, we will issue the final draw of $8,000. Repair draws and schedules are subject and depend on the property.
- Sell & Pay Off. Once all the renovations have been completed, put the property on the market and sell! You will still be responsible for the payments on the property until the time that it sells. If it does not sell before the maturity date, which is one year unless otherwise stated in the loan documents, then you will need to either pay off the loan or refinance at that time. If the property sells, pay off your loan and we can work on the next deal!
There are no specific requirements for applying and/or qualifying for a rehab loan. As with any hard money loan, it really depends on the property being used as collateral. Our process is the same and simple throughout. We don’t do credit checks or evaluate your debt history. Instead, we base ourselves on the value of the property being used as collateral.
Choose Entrust Capital Funding Rehab Loans
With Entrust Capital Funding you will be working with the most knowledgeable people in the industry ready to provide the best customer service. We offer the lowest interest rate in the area (8.99%) and we offer contracts that simplify the process not complicate it. We are part of the biggest alliance of real estate-related companies working together to provide the most value for our customers.
Releasing of the Funds
Remember that Entrust does not tell you how to repair the home, but will only ensure the repairs are being done properly and up to code. As we see the progress, we will release the funds in increments so that you can slowly work through the needed repairs.
Contact Entrust Capital Funding for More Information
It’s normal to have questions about an important investment. If you are looking to renovate a property, choose an Entrust Capital Funding rehab loan. We are here to help!