Financing recommendations for hard money + longer-term/DSCR buy & hold LTR

[Casey S.]

Hello! I'm looking to invest in a long-term rental here in South Bend, Indiana – but I'd like some recommendations for a hard money lender because for the initial purchase, I plan on borrowing for the purchase price, renovation costs, and closing costs.  In addition to a hard money lender providing the bulk of the purchase price (ideally 80%+), I have access to a private money lender who could cover the down payment, and as for the renovation and closing costs – those would be covered by one lender or the other.  The hard money lender has to be okay with my private money lender being secured in 2nd position.  

The idea is that I'd select a property based on the opportunity to force appreciation and create a sizable difference between purchase price and ARV ~ choosing a property that's in solid shape (not a complete dump), and has some extra space to add a bedroom and a bathroom, potentially by having an egress window installed in the basement, new flooring, plumbing, tile, paint, etc. I'd even consider converting a garage into an ADU.

After the renovation, I'd refi and pay off my hard money lender as well as my private money lenders, covering holding costs, closing costs, and ideally netting a bit of cash that I'd use for the down payment on the long-term debt. I suppose I'd refi into a DSCR loan, but I have some requirements:

*Nested/layered LLC -- In my case, the entity that purchases and owns this property will be a subsidiary LLC that is owned by a holdings LLC that is owned by a trust. So, I need the lender for this longer-term debt to be okay with this nesting/layering of my LLC.

*I don't want my personal credit or DTI impacted. I understand that in many cases, a personal guarantee will be required.

Thanks in advance for your recommendations / referrals. I will also fill-out the BP Lender Finder. I just wanted to hit from multiple angles. 

[Ryan Rominger]

Sounds like a solid BRRRR strategy! For hard money lenders in South Bend who are comfortable with a private lender in second position, you'll want to look for those experienced with layered financing and investor-friendly structures.

For your long-term DSCR loan, you'll need a lender that's okay with your nested LLC structure—some DSCR lenders are fine with this as long as the parent entity provides a personal guarantee.

If you’d like a few direct recommendations, happy to connect you with our network!