Hi I was wondering if this would be a good idea even though it may be risky. I would like to start my Real Estate Investing career through a combination of financing options . Would it be a good idea to get a hard money loan to rehab a house then refinance into a first time home buyer mortgage program, even if that's possible, I'm not too sure with the rules and regulations. The reasoning for doing this is I hear that FHA loans and other traditional mortgage loans takes much longer and are given less priority to sellers and I don't want to lose out on any good deals based on waiting for a loan approval. After being a owner occupant for a year or two I would like to resell the house.
I don't think a hard money loan is a bad idea..if the deal makes sense. I don't see why you would refinance into a FHA loan. You could just refinance it with get a regular mortgage, you wouldn't need a down payment because you technically paid "cash" for it (the bank won't really know you got a hard money lender to fund your deal). If you get a good deal you can use the strategy that Brandon Turner mentions a lot on here. It's called the BRRR strategy. I've been doing some reading on it because this is a strategy I will start implementing soon.I have saved some of the links (see below) but definitely look at the article published on here to really get a good idea on how to execute the strategy well.
I don't see the need to do a hard money loan and then refinance into FHA. If anything house hack the property you use an FHA loan on (I plan on doing this with a multi-family property). And you can use the BRRR strategy on another property.
The possiblites are endless!!
BRRR links below (definitely look at the articles published about this topic on bp)https://www.biggerpockets.com/forums/223/topics/429535-brrrr-strategy-really-works-even-in-the-bay-area https://www.biggerpockets.com/forums/61/topics/237923-brrr-strategy-confusion---refinancing https://www.reimillionaire.com/the-brrr-strategy/ https://www.rentalstowealth.com/the-final-r-in-brrr-a-step-by-step-guide-to-refinancing/#comment-547
I think a hard money loan might be a good idea and it closes fast. It also gives you time up to a year to to pay off the loan and your only making interest only payments.
There are loans outside of FHA that can handle both the hard money loan and the refi. Send me a note.
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I’ve purchased a duplex and looking to purchase more. Could we talk more about your comment?
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