The business of house flipping is not cheap. If you are an investor planning to flip homes for profit, you will need a huge amount of cash. This is where a rehab loan comes in. Usually, rehab loans come with reasonable rates, making this a good venture. Take a look at these three types of rehab loans and how they work.

FHA 203(k) Permanent Rehab Loan

This type of loan is ideal for someone who wants to remodel a house for their use or hang on to it for a while and then sell. Federal Housing Administration (FHA) 203(k) loans have low-interest rates and longer repayment periods. Note that the cost of the home remodeling project needs to be not less than $5000. There are also things you cannot do with an FHA loan, such as :

Minor landscaping renovations
Any project that is expected to take more than six months
Adding luxurious facilities or amenities like a tennis court or swimming pool.

Investment Property Line of Credit

This type of loan is best for an investor that owns a property and wants sustained access to credit. Investment property lines of credit are similar to home equity lines of credit. You can borrow a certain percentage of the property’s equity and use it over and over whenever you need it. Because this type of loan is secured by the property, the interest rates tend to be lower with a longer repayment term.

Hard Money Rehab Loan

If you are having trouble getting a rehab loan, you can consider a hard money lender. Unlike traditional lenders who look at your income and credit score, hard money lenders factor in what can be used as collateral.

How to Qualify for a Rehab Loan

There are three things that lenders will look at before giving you a loan.

Credit score: To qualify for FHA 203(k) loans, you will need a credit score of 550 or 500
Real estate experience: Lenders want to be sure they are working with someone that has flipped houses before and made a profit
Income: You will also need a steady income.

Rexford Commercial Capital is a qualified lender offering rehab loans to real estate investors. Our clients include contractors, rehabbers, and real estate investors seeking funding to rehabilitate homes. Give us a call, and we will help finance your next rehab project.