New Financial Route

I’ve mentioned before that I funded the purchase of my triplex with a hard money loan, which included money to renovate the property. However, I bought my other investment property with a conventional mortgage. The loan for the conventional mortgage is a lot cheaper compared to that of the hard money loan, but that also means that I have to find the money to do the renovations on my own.

My idea here was to see if I could save money by using a conventional loan and obtaining a renovation loan separately. In my experience, finding a lender has been difficult…

Most hard money lenders don’t lend money on a property that has already been closed. Basically, banks want to use properties as collateral in exchange for the loan which they can’t do if the home has already been purchased with a different lender (loans with collateral are called secured loans). I could refinance my property, but I would end up paying thousands more dollars in origination fees and other closing costs.

Since I recently purchased this property (and also since property values haven’t increased much this year compared to last year and the year before), I don’t have much equity. That rules out a HELOC. I’ve also found that personal loan limits to be too small for my needs.

However, I did come across an interesting option the other week while doing some research. There is a company named Fund & Grow that offers 0% interest rate funding for entrepreneurs of all types who are looking to start their business.

They offer a line of credit that is based on various business credit cards. Their account representatives apply for credit cards on your behalf. The idea is that the company can provide you more business credit that you’d be able to get on your own due to the relationships they have with banks. The funding comes in waves of around three to four months, and a membership (which was about $3500 with a discount) lasts for twelve months.

Will this be how I fund the renovation for my second investment property? Who knows, but I signed up a couple weeks ago and am waiting for the results from some of the credit card companies now. When I asked one of the account representatives over the phone about converting the credit to cash, they referred me to a third party service that can do so for a 2.9% processing fee.

They offer a 60-day money back guarantee, so I felt comfortable with taking a risk here and trying out the service. Hopefully I will be able to get the ball rolling with the rehab!

Has anyone else used Fund & Flip or a similar service for loans? Do you know any creative ways to find property rehabs? Let me know in the comments!