What it is
Short-term financing for an investment property that will be renovated and sold or considered for a later refinance. Eligible acquisition and renovation costs depend on the lender.
Who it may suit
Investors with a defined renovation scope, a realistic budget and a clear sale or refinance plan.
Typical uses
- Purchase and renovate an investment property
- Reposition a property before sale
- Renovate before seeking longer-term rental financing
More detail, when you need it
How does project leverage work?
Loan-to-cost (LTC) compares the loan with eligible project costs. Loan-to-value (LTV) compares the loan with property value. Lenders may consider current value or after-repair value (ARV), apply multiple limits and exclude some costs.
What cash should I plan for?
Plan for the required purchase contribution, closing costs, carrying costs and work that may need to be paid before a draw. Funding percentages and draw conditions vary.