Get Commercial Real Estate Loan for Rehab Property

Real estate loans are as diverse as the investors buying property in today’s market, and each of your options has been fine-tuned to work with a specific time frame and business model. If you’re looking to rehab properties and turn them around for resale, there are options built just for you, options that don’t involve long-term loans that can take months to approve and years to pay off. Instead, commercial real estate loans for rehabbing properties are focused on short-term lending, with payment options that have proven to be cost-effective for borrowers in this market. Many of them have higher LTVs than traditional loan options, and they can be used as either a sole source of financing for a fast property flip or as starter financing so you can close and improve a property before refinancing into a long-term instrument.

What To Expect From Rehab Loans

Short-term property loans can be either secured or unsecured, but the unsecured options tend to be a lot less expensive because the property is tied to the loan. Depending on the lender, you will find the terms run between one and three years, with 12-18 months being the most common turnaround time to loan payoff. Most lenders assume the loans are going to be used for properties that are being improved and resold, but in the end, none of them care as long as you have the next stage of your financing lined up in time to make the final payoff date for the rehab loan. Commercial real estate loans for rehabbers tend to only require interest payments until the final lump sum too, so they are designed to keep your overhead manageable while you work. Some are even built to provide you with some of the working capital needed to make the improvements.

Choosing the Best Option for Your Investment

While there are a lot of options available for these loans, individual lenders will have a lot of variety in their offerings. Some let you choose from a few different payment structures, including a choice of the length of the loan term. Others have a very set structure that has been fine-tuned to be inexpensive for borrower and lender. That’s why it’s important to shop around for a commercial real estate lender whose program is calibrated to your needs. Making a business plan that spells out your time frame for property improvements and your costs for the project is a great way to get ready for an application while assessing everything you need to consider before choosing a lender.


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