Getting financing to rehab houses is harder now than before the crash, but can still be done. The preferred method to buying houses for rehab is cash or using an equity line of credit. This way if you are dealing with a motivated house you can close right away without the hassle of jumping through a lenders hoops. If this isn’t an option, you can find a private lender to fund your real estate deals.
By offering friends, family, and anyone you know 8-10% interest you should be able to raise the money. You can set it up to defer payments to them until the rehab is complete and you sell the property. You will give them a first mortgage and personal promissory note in exchange for the money. This means they get the house if something goes wrong and can come after you personally.
If you’re planning to get financed by a bank for rehab projects, you will likely need to contact at least a few in your area until you find ones, so don’t be discouraged at first. Don’t waste your time with big banks. Instead focus on the small community banks. If you plan to get financing for rehab projects and real estate investing in general, you will first need to assemble a loan package which lenders will request. It should consist of your last two years personal tax returns, personal financial statement (that shows all your assets & liabilities), a business plan, a cash flow statement (if you currently own property), & a brief description about yourself and the project you are applying for financing on as a real estate investment.