The Half Million Dollar Question; Hard Money for an Owner Occupied House

Upstate New York, New York
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The Half Million Dollar Question; Hard Money for an Owner Occupied House

Alan Held
Member since 2023 · 2 posts · 1 vote

I've spent the better part of 6 months trying to acquire the dream home... Its everything my wife and I ever wanted, but it is a short-sale, as-is, and the sellers will only accept cash offers due to the condition of the property (several violations with the town code, that are minor but known).

I can afford the asking price with a conventional loan, but that's not acceptable... my other strategy was to buy the property with a hard money loan and refinance, but nobody does hard money on owner occupied homes.

I know about a lot of these "cash offer" mortgage companies, but nobody does it in New York 

Been trying to find a loophole around this one for a while, but have come up empty thus far.

Thank you

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  • Greg ScottPro Member
    Rental Property Investor · SE Michigan · Member since 2014 · 4k+ posts · 6k+ votes
    3y
    Quote from @Alan Held:

     nobody does hard money on owner occupied homes.


    I'd challenge this statement. I don't recall a HML ever asking what I intended to do with the property after it was rehabbed.

    Most hard money lenders are just looking at the asset. It is possible they will assess the feasibility of that property as a rental in case they need to take it off your hands. However, a HML won't care if you decided to move into it instead of renting it out. They just want to get their capital back.

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  • Jonathan Taylor SmithBusiness Member
    Rental Property Investor · Durham / Raleigh (Triangle), NC · Member since 2015 · 841 posts · 803 votes
    3y

    @Alan Held - I purchased my dream waterfront lake house via my LLC using a hard money loan. It was initially unfinished, but once it was done we refinanced it into my wife's name, moved in, and sold our prior home. Then after living there for the required year, we found another distressed house, bought it via my LLC using another hard money loan and we're currently doing the rehab. Once the rehab is done, again we'll refinance it into my wife's name and move in - keeping the lake house as a second / vacation home. There are also certain tax benefits from the time they were owned by my LLC. This works even better for us because my wife has sufficient W2 income to qualify for the loan by herself.

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  • Eliott Elias
    Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes
    3y

    The lender is going to want to make sure it is a good deal. You most likely are going to have to close in your LLC, and run the numbers by them. ARV, rehab, etc.

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  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    3y

    @Alan Held

    First a hard money loan is typically a very short timeframe. Most (actually Al large) hard money lenders (we know we do) have you sign a non owner occupying affidavit and make you buy property in a LLC.

    Hard money lenders don't lend on owner occupied because of the laws surrounding it as well as the amount of time to seek recourse should the loan fail. The loans issued by a HML are not compliant with consumer protection laws for owner occupied properties.

    If you try and buy it in your name with a HML that will set off red flags

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