Investor rehab loans, on the other hand, are made for these types of investors—the loans are meant for purchasing and renovating properties. They’re great for fix-and-flip homes and can also be useful to long-term buy-to-rent investors who need fast financing now before turning to a more traditional source later on. Rehab loans generally cover rehab costs as well as the property’s purchase, although they sometimes disburse the re- hab amounts through draws while the rehab is being completed, when the lender has evidence of some of the completed repairs. ONLINE LENDERS—ABETTER OPTION? Investor rehab loans are one of the most effective—and some- times one of the only—ways for the investor to pay for the pur- chase without cutting a check directly from his bank account. But which of the available sources can a broker trust? Many of the smaller finance shops that focus on investor rehab loans are

a little too fly-by-night for many investors’ (or brokers’) tastes— and since professional investors keep doing deals on a continu- ing basis, they (or their brokers) want to be particularly careful about protecting those clients. The new online crowdfunding lenders can often be a great option. The company where I work, for example, is a lead- ing—and well-capitalized—online real estate lender, one whose mission is to use technology to make fix-and-flip rehab loans simple and fast. The application process is straightforward and simple. The investor merely has to provide a few key parame- ters—the location of the property, the purchase price, the rehab budget, their income and net worth, plus a few other items — and our technology helps take care of the rest. Generally, this results in letters of intent being turned around within 24 hours. Online crowdfunding lenders can also help to extend an in- vestor’s geographic reach. An investor focused on Boise, Idaho, for example, may not be able to find a bank or hard-money partner with either sufficient speed or resources to help him do multiple flips in that area. Many smaller finance companies dealing with investor rehab loans have enough financing for a few projects, but are left scrambling if too much volume comes through the door. Online lenders, however, have investors from across the country who are eager to provide financing—so that active investors (or their brokers) can effectively gain access to a much broader pool of capital. This capital pool may not be inexhaust- ible, but it’s pretty close. My company, for example, adds new investors at a clip approaching 50 per day, so that new capital sources are continuously being added. Moreover, crowdfunding investors who have had one rehab loan go full cycle tend to come back and do other loans, so that money is continuously recycled back into other projects.

THEAPPLICATION PROCESS It is important that the rehab investor (or his broker) be prepared with the details of the property and his own financials. Even crowdfunded lenders can’t give a loan approval without

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Lawrence Fassler, an attorney and real estate investor, is Corporate Counsel of RealtyShares, a leading real estate investment marketplace that places equity investments through North Capital Private Securities Corporation; a registered Securities broker-dealer, and member of FIN- RA/SIPC. RealtyShares as an institution does not advise on any legal issues, and this article is for general information only and does not represent professional legal advice. Contact the author at

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