I am looking into buying my first house with my father! I am thinking that we do a convention loan of 3% down, renovate it, rent it out to a tenant, and refinance. I hear that you can’t flip a house for more than 20% profit within 90 days or purchase. Plus, I want to hold onto that asset so it can be used as collateral for future SBA loans. Does this sound like a good plan? And would anybody have any advice? Thank you!
If you are looking for 3% down conventional, chances are you will need to owner occupy. I don't know where the can't flip a house for more than 20% profit in 90 days of purchase comes from. Is that some kind of local ordinance in your area?
Your idea sounds like what is called a house hack. You buy the house and renovate it (if you want conventional financing, you probably need something that only needs light rehab work). You find yourself a roommate (or renters if the property is a duplex or more), then refinance for the higher amount. If your father is providing down payment, that will also muddy things up a bit with the conventional mortgage, so I would recommend you find a lender who will work with you and who knows what your plan is. You might need to call a lot of lenders to find one that will do it. My recommendation is to start with smaller banks and credit unions, as those can be easier to work with on non-cookie cutter loans.
You also want to think about the renovation itself. Are you planning on doing all the work yourself, or hiring it out? You also need to check with your local permitting office to see what would need permits and what would not. You don't want to get a permit violation near the end and they make you undo some of your work so they can inspect it.
The last piece of advice I would have is to make sure you have plenty of reserves. Renovating a house (even if it is light) can have hidden costs that you need to have a plan to handle.
It's great that you want to get started, good luck on your journey.