Hard Money - Wrap around
The last week I’ve been on the hunt for private money to finish a construction project.
Quick breakdown.
I have a $182k first mortgage (Original house burnt down). I’ve spent $350k on the rebuild and got the house to 85% complete.
I'm trying to secure $100k to get the house done in 90 days - then HELOC to pay back private money. House will appraise at $800k.
One of the offers I got was in the form of a “wrap around”.... The lender loans me $282k on paper - ($182 for first, $100k in cash) and takes responsibility of the 1st mortgage for 120 days. The promissory note states that when I pay back the $100k the note is satisfied and I “get back” my original $182k first mortgage.
Anyone have an opinion / suggestions on what to look out for? A due on sale may not be be concern since we aren’t “selling” the property?
I have a call in with the bank - not sure if it's too complicated? I'd basically ask them for a HELOC to pay off the $100k to satisfy my wrap around...
I‘ve got a couple informal “easier options” for $100k private second mortgages - just nothing in stone yet.
This is my first hard money transaction - any advice would be great.