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Renovation loans, also known as rehab loans, help real estate investors both purchase and renovate properties. This is also known as a fix and  flip loan.

A renovation loan is used by investors who need financing to purchase a distressed residential property and to completely renovate said property. A renovation loan will combine the purchase price with the rehab costs into a short-term, interest only loan. Depending on the investors credit-worthiness and income, they may qualify for various loans. Typically, investors seek out hard money loans due to their quick funding, interest-only and short terms.

Hard money renovation loans are offered by a variety of lenders; both small and local and large and national. Local lenders are able to work with unique projects and generally offer a wider range of rates and fees. They also are able to be more flexible with their qualifications and terms due to their hands on approach. Bigger national lenders typically have standardized costs and are not flexible with their qualifications and terms.

Terms of renovation loans vary. Generally, lenders will lend between 60% to 80% ARV (after repair value). The ARV is what the property will be valued at once it is rehabbed. For example: house A purchase price is $65,000. The investor, after all their homework, believes the property will sell for $110,000 after it has been renovated. The hard money lender will lend 75% ARV (that is 75% of $110,000). The loan will be in the amount of $82,500. Not all lenders require a down payment. However, borrowers should be prepared to put down anywhere from 15% to 25% ARV,

Borrowers will need to provide three months of personal bank statements, purchase contract, a list of any past projects and a renovation budget. Each lender is different and may require different qualifications. And, although hard money lenders aren’t overly concerned about a borrower’s credit score, they do like to see at least a 550. Borrowers can prequalify in as little as 10 minutes and can be funded within 10 days.

Interest rates, points and loan terms

As stated above, local, smaller lenders tend to be more flexible while national lenders stay more standardized. Typically, interest rates run from 7.5% to 13% with points ranging anywhere from one to ten. While these rates are higher than conventional mortgages, they reflect the higher risk that come with renovation loans. During the life of the loan the borrower will make interest only payments with a balloon payment at the end. This keeps the costs down for the investor while he is rehabbing the property. Loan terms are generally from 12 to 36 months; however, they can be from six months to five years depending on the unique situation of the borrower. Hard money loans are beneficial to any investor requiring a renovation loan.

          Dennis Dahlber Broker Ri CEO Level 4 Funding LLC

Dennis Dahlberg


Level 4 Funding LLC

Hard Money Lender

Hard Money Loans

Hard Money Loan

Arizona Tel:  (623) 582-4444

Texas Tel:      (512) 516-1177

Dennis Dahlberg Broker/RI/CEO

NMLS 1057378 | AZMB 0923961 | MLO 1057378

22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027

111 Congress Ave | Austin | Texas | 78701

About:  Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

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