Flipping and then living in it!?

Question

Hello all,

I have done a few flips in the past using a private investor, doing the project, selling it off, and moved on.   I found a house that's gonna be different and would love some input.

I found a house that I personally want to move into.  I plan on buying it with private money like a typical flip and then refinancing or selling it to myself.  I am not sure if anybody has done this type of thing before but I would love to hear your input!

For what it's worth.  I made my offer as if it was a standard flip.  So ideally I would like to move into the house no money down and my profit is basically my equity!

Jeff S. · Answer

Financing this using private money could be difficult, @Greg Behan .  A wise lender will initially ask you to state your intended use of the money up front. Once you said you ultimately want to make this house your personal residence, most private lenders would not be able to provide a loan for it.

Since the use of the money would be for personal use and not for a business purpose (like a flip you'll ultimately sell at a profit) then Dodd-Frank, TILA, RESPA, TRID, and an NMLS registration would be involved. Most private/hard money lenders can't or don't get involved with this.  Even if they could, they would expect you to show how you qualify for the refinance.

Similarly, if the house were in rough enough shape that only a private lender could fund it, you might not find a bank that is able to either using a conventional loan.

You might consider a 203k loan. These are designed exactly for your situation and the rates are substantially cheaper than most private loans. They also automatically become permanent financing so you don't have to worry about qualifying and then refinancing another lender out of your purchase money loan.

Greg Behan · Answer

The other reason I was looking to avoid the bank initially is bc of the speed of private money over a bank.

Greg Behan · Answer

I am open minded to any ideas...  my only concern with 203k is I'm not 203k certified.   Can't do typical loan off the bat due to current condition

Jessie Huffey · Answer

Is there any reason you could not use a typical home loan and just have it as your primary residence?  If you have access to a Home Equity Line of Credit that could finance your flipping cost. Finally, when you need to sell down the road you would not have to pay capital gains on the profit (due to the fact it was your personal residence for 2 years).