help please ~ 2 Questions. 2nd deal ~ Pittsburgh, PA
Dear BP community,
This will be my second investment property. I have two main questions 1) financing; 2) whether to leave the home an unofficial Duplex (it has Licensed Neighborhood Commercial zoning) or convert to a true SFH. Brief background: My initial investment is a SFH buy and hold with a traditional loan and I paid for all of the improvements out of pocket. The property I'm getting under contract soon is a 3 story, walk-out basement, brick row home in Pittsburgh. Anticipating a major rehab, but not down-to-the studs. Purchase price should be $160,000-175,000.
This time:
1) Hard Money or Conventional 30 yr loan w/ 5 year ARM.
considerations | 1 year interest only loan for $260,000, $136,000 rehab holdback, 8.95% interest rate, $924.93 monthly payment, $65,305 approximate Cash to Close. OR 30 year Conventional loan 5 Year ARM, 20% non-owner occupied down payment, $990 monthly payment at 5.875%, $50,000 approximate Cash to Close.
pros of hard money - rehab budget provided by OPM
cons of hard money I'm unfamiliar with the product and would prefer a lower cash to close amount
2) "duplex" or SFH
considerations | I'd like to utilize the home as a Short to Mid-Term Rental.
pros of leaving a duplex - it can be rented unit 1, unit 2, or both which provides some flexibility.
cons - of leaving it a duplex - I predict it would appraise for more as a SFH
Hopefully I've provided a decent, concise description of my situation and questions. Any help is appreciated. Thank you for reading!