Rehab is basically repairing something, which isn’t in a very good condition and then turning it into something better. This process is termed as Rehabbing.
Similarly, there are houses, which need rehabilitation. If you look in your neighborhood, you could see that there are houses which are in a deteriorating state. This could be due to some natural hazards like flood or earthquake or may be due to the inadequacy of the inhabitants.
There are many families, who wants to live in a brand new house but they can’t afford it. A lot of hard money lenders can sense this and therefore, they help out these people in getting those properties, which have been rehabbed and now are in very good condition.
You must be wondering what these hard money lenders do. They basically lend money to people, who bring them good properties, which need a bit of rehabbing. They lend them money to buy the property and to repair it as per the requirement.
Rehab hard money lenders lend money to real estate investors, who buy a property that is not in a good condition and then they rehab the property and get the needed work done on the property. Ultimately, they sell the property and make some profit.
Rehab lenders believe that they can only make money if the borrower makes money and that’s why, they help the borrower in finding a good deal.
Rehab hard money lenders lend money on short term basis i.e. between 6 months to 1 year maximum. They fund to a property, which is not in a very good condition and turn it into something new by doing small stuffs like painting, carpeting, remodeling the kitchen and bathrooms.
Most of the times, these properties doesn’t need a lot of rehabbing and the repairs are negligible but they just need a bit of touch up, so it could look presentable to the buyers.
But one need to keep this thing in mind that there would be lenders, who a e not willing to lend money for the repairs and they are termed as non-rehab hard money lenders.
The only difference between rehab and non-rehab lenders is that of repairs money and this is thing, which discriminate the true hard money lenders from other hard money lenders. If they know that you have a good deal in hand, true hard money lenders will definitely lend you money to buy the property as well as for repairs.
But if your property doesn’t need any repair or if you already have the money for repairs, then you can use the services of non rehab hard money lenders as well.
Another important thing to realize is that hard money lenders only lend to the properties which are non-owner occupied. They will never fund a property if the owner lives inside it because they don’t want to kick someone out of their house and there are a lot of legalities also involved when it comes to owner-occupied properties.
The best thing of working with a rehab lender is that they don’t look at the current condition of the property but they try to figure out what this property would turned into, once the repairs are done.
Working with rehab hard money lenders is quite easy. You can buy the property and start doing the repair with your own money. After doing a certain amount of repair in the house, let’s say 25% or 50%, and then you submit all the receipts of the repairs and ask the lender to visit the property.
Once the lender is satisfied with the repairs, they will reimburse the money and then, you can move on with the remaining repair work.
Some of these lenders will reimburse all the repair money and some will give you only a certain percentage of the repair money and you need to manage the rest by yourself. It is better to talk about all these things before signing a contract. best money lender singapore