Advice on Acquiring Second Buy/Hold Property via Hard Money Loan

[Jessica F.]

I am in the process of getting my second property in Philadelphia. It will be my first via a hard money loan and my second purchase (first purchase was thru FHA loan a few months ago). I just wanted to get thoughts, ideas, and suggestions for getting this property.

The property I am looking at will be a duplex most likely between 20-70k. It will be a fixer upper (not necessarily a shell) that I plan to fix up, and refinance out of the hard money loan, and bring in tenants. I expect to take no more than 90 days to get the property occupied. I would also be able to pocket the difference after the home is refinanced. Most hard money lenders cover rehab costs if you are using a licensed and insured contractor. The contractor that I have used in the past does great work and is a family friend that we have known for years. He is licensed but not insured so a hard money lender may not cover them. I was going to take out 1-2 personal loans (depending on the bank or credit union) to finance the rehab/contractor costs and additional closing and out of pocket expenses and also include a little financial cushion for unexpected financial costs. These loans will be paid back at time of refinancing. 

What do you think of this plan? I know it has a certain level of risk involved but my biggest concern is will I have trouble refinancing with a traditional bank if I have 1-2 personal loans out in addition to the hard money loan? Also, I have a registered LLC which may be what the hard money loan will be under so it does not affect my debt to income.

I welcome any thoughts, ideas, and suggestions!