Hey BP Members, 

I am under contract for a four family and my idea is the BRRR method. However, instead of buying with cash, I am looking to put a mortgage on the property, fix up, turn over the tenants, raise rents and refinance out.

I have enough cash for holding and repairs, but I don't have enough for the 25% down. 

Am I naive in thinking someone will loan me the 60k needed to make this deal happen? 

So I do understand you have to show the money in your account for two cycles before the mortgage company asks. 

The idea would be for someone to loan me the down payment, I pay them interest the whole time it clears my account, then during the rehab and once the refinance is done, I will pay them back their money. 

From a contractual standpoint, I would put together paperwork outlying a promissory note and once the property closes, file a lien against the property for the 60k. It would be a second, since the mortgage company would be first. 

***I am not trying to solicit ANYONE for this, rather I'm just asking if you were a PML and I came to you with this scenario, would you want to work with me? 

BACKGROUND: 

I live in Arizona and own three units in Illinois. Townhome for three years and the duplex for two years. Most recently, I've had all three units turn over and have worked remotely with contractors, cleaners, etc. to get the job done. 

This particular property would also be out of state.

Looking forward to hearing from you! 

@Matt McConkey you can get a hard money lender to loan you 100% of the rehab and 90% of the sale price.  Just shop them and ask them what their stipulations are. 

@Matthew Irish-Jones Yeah, fair point for sure. I had considered that avenue, but didn't truly look at the numbers to see if it makes sense. 

Being a lender in second position is risky enough as is. To be an unsecured lender with a lien to be recorded at a later date? I'd have to have quite the relationship with the borrower. Also, your first lender may balk at said arrangement immediately after closing.

@odieayaga Yep, totally valid point. Tha is for bringing that up. I've got a family member who will do the deal with me, but I was looking to expand my tree of PML. Not on this one!