Buy with my own cash or use hard money
I made an offer on an REO property in southern NJ. Details below:
Offer price: 70k
Rehab budget: 35k
ARV: using comps in the area 165k. Going conservative and will say 150k
Goal: Probably fix and flip. May BRRRR.
I have the cash to purchase the property outright. I have enough equity in the other properties I own to take a HELOC to cover the rehab. However, I'm considering using hard money lender for the purchase price of the home. I don't want to use them for the rehab as I will be doing some of the work myself and I'm not a licensed contractor so getting reimbursed with draws wouldn't work.
I understand that I will make less money due to the various fees that come with hard money lending. My thought process is twofold: 1) I'm not sure I'm comfortable using 2/3 of my "safety net" (savings in case I lose my job, someone in my family is in hospital, etc.) to fund the purchase. 2) My goal is eventually to purchase real estate in a better area where tenants are more stable. I won't have enough cash for those BRRRRs. So by using hard money now, I prove my ability to get a flip done and start getting better rates, fewer up front points, etc. for those larger transactions later.
Curious to get other's feedback on any and all of the above. Thanks in advance!