Updated almost 4 years ago on . Most recent reply
Delayed financing with Hard money
Hey everyone,
I am considered using hard money to buy fixer uppers and then convert to long-term rentals with ADUs. The goal is to rinse and repeat. Does anyone know if purchasing a property "cash" , but with hard money, will qualify for delayed financing?
If I go hard money, I need to have an exit strategy and I want to refinance ASAP when rehab is complete.
My other option is to wait the 6 months and by that time the ADU will have been built and will increase the value.
Most Popular Reply
@David Maldonado - Chris is spot on. If there is a lien/mortgage secured to the subject property, than its not a cash purchase. It needs to be an unsecured loan, so nothing shows up on the title report as attached to the home. If the loan is secured to a different property, that is fine as well!
Another idea if you have a good (well great) network of HML's/friends with capital, is for someone to lend you 90%-100% LTV on a HML. And than do a cash out refi into a conventional loan immediately and repay the HML. You can also do a 1st HML at 70% and maybe a friend of colleague can be in second position, 2nd lien at whatever they are willing to do. Than you can do a non cash out refi immediately.
Or the easy path, as you said is to wait 6 months for the ADU to be built. Are there comps in the area with ADU's? Keep in mind the appraiser may give you a different value than you are hoping for if there is not any recent data/sales of homes with ADU's in the area. That can be a tough one for the appraiser.