Capital Fund 1 is different from banks. There is no complicated application process or credit check. Our home rehab loans can be used for the purchase and the improvements that are needed in one loan. This is beneficial if the property has good bones but needs significant repairs. In some cases, the house is not habitable without the upgrades.
The Federal Housing Authority is involved in 203K loans, which make them less risky. It also makes it easier for you to qualify if you have less than perfect credit. Capital Fund 1 loans are unique because they are based on the project value, not on your credit. This can enable you to receive project approval within one day. If the renovation involves replacing the plumbing, tearing out walls, or other major repairs, the rehab loan may allow you to borrow enough to cover rent or an existing mortgage until the project is complete.
If you want to fix-and-flip a property, or rehab and season it before refinancing, a hard money rehab loan may be the right option for you. Interest rates often run slightly higher than conventional mortgages, usually between 7.5% and 12%, as it reflects the increased risk that is inherent in a major rehab project. The typical loan term is a minimum of six months, usually based on loans of $50,000 or more. This allows you enough time to finish the project and implement an exit strategy. There are no prepayment penalties, which means you can pay it off early and reduce the holding costs.
How it Works
Begin the process by getting prequalified. It is non-binding, takes only a few minutes and helps you determine the expected costs, fees, loan to total project cost ratio, and more. Once complete, you will be presented with the loan options that fit your project’s parameters, giving you a good idea whether you can get financing.
In addition to the property address, specific information is required, such as:
- Project description
- Detail of the improvements (Scope of Work)
- Estimated project cost
- Projected timeline
- List of bonded contractors
- Changes to square footage, if applicable
If the rehab is substantial, a bonded contractor should perform the work. Their bid should include the SOW as well as time and material estimates, which helps set the budget. The final budget is important as Capital Fund 1 loans cover up to 80% of the total loan amount.
Once you are pre-qualified, provide us with the signed purchase contract. Capital Fund 1 does not require prior experience, but if you have completed previous projects, it may be to your advantage to include information about them. Due diligence may include an independent “as-is” appraisal and an ARV appraisal. Not only does this provide the expected value after renovations, but it also indicates the current fair market value of the property.
When the loan is approved, the rehab funds are put in an escrow account and distributed in draws. Unlike traditional loans through a bank, the property and renovation costs are covered under one loan. Avoid problems during the project related to underbidding by using reputable organizations that are familiar with rehab loan guidelines.
Capital Fund 1 hard money rehab loans are effective lending tools for homeowners and investors in Phoenix, Arizona. They typically provide opportunities for fixing and flipping a property that cannot be found with traditional lenders. Project scope and size can vary significantly, ranging from adding rooms, kitchen renovations, and structural repairs.