How Do I Finance a Vacant Rental That Is Under Renovation?

A vacant rental under renovation is harder to finance than a stable, tenanted one, because the property does not yet show income and may not yet look like the finished product. The right product depends on how far along the work is and what you need the money for.

Two different questions

• I own the property with equity and need cash: a HELOC or cash-out refinance, sized on today’s value. See renovating a rental.
• I need a loan sized to the project: fix and flip and similar loans use cost and after-repair value; see fix and flip loans and how the loan amount is calculated.
• I plan to rent it after the work: compare options in fix and flip vs. fix and rent.

What lenders look at on a vacant property

• Condition: many lenders want the property to be in reasonable, habitable condition. Serious deferred maintenance may need to be fixed first (see property types).
• Appraisal: expect a full appraisal and a lower as-is value if the work is incomplete.
• Rental income: with no tenant, some programs use an appraiser’s market rent estimate. See what DSCR is.
• Insurance: a vacant dwelling can be treated differently from an occupied one. Check coverage and what the policy requires.

Budget and timeline planning

Build in a contingency for overruns. If you borrow in stages, confirm how the draws work and how long they are available. Do not plan to depend on a line you have not closed.

Documents to have ready

• A scope of work and contractor bids
• Permits, if any
• Proof of insurance
• Title or vesting information
• A lease or a rent estimate for the finished unit

Frequently asked questions

Can I get a HELOC on a vacant property?

It may be possible under some programs, depending on condition and your overall profile. Ask us about your specific property.

Does the lender need to inspect the work?

Home equity loans generally do not track work. Construction-style loans do, with draws released against progress.

Will a lender count future rent?

Some DSCR-based programs consider an appraiser’s estimate of market rent. Ask which documents apply.

Related guides

• Borrowing against a California rental: overview
• As-is value vs. after-repair value
• Renovating a rental
• Fix and flip loans
• DSCR loans for investment property

Rates and terms depend on your credit, property and loan amount; approval requires qualification. Contact Ramez Malki, NMLS #315466, at Lendia, Inc. (NMLS #295073 | Licensed by the California DRE #01877189). Lendia lends only on California properties.