Is this allowed?

Question

Hi all, is it a good idea to buy a property from a wholesaler with a lender and then getting a mortage after renovations? I am learning the process and not exactly sure of all the paths and steps. I want to house hack for my first duplex or multi family home to learn the ropes. Thank you!

Joseph Tadres · Answer

Wholesale deals typically require closing in cash or with hard money. So, you could close with hard money, which requires a decent amount of capital. Then you have 6 months to fix and refinance into a conventional loan.

Abel Curiel · Answer

In New York, most wholesalers will allow you 1 walkthrough, maybe 2.

I'd recommend if you're purchasing from a New York Wholesaler, aim to have your contractor with you for your walkthrough so that they can assess the potential renovation costs.

You should simultaneously be searching on market properties since many BRRRR options appear on the MLS. You can aim for properties that are beyond the median Days on Market (DOM) for the area.

For financing, you can use FHA (incl. 203K) or Conventional for most on-market deals.

For wholesale deals, they'll likely want you to use hard money. In that case, be sure to have a contractor estimate and a comprehensive list of comps (Active listings, pending, Sold, expired). Analyzing comps should give you a clear picture of ARV.

All the best!

Abel

Frankie Vozzi · Answer

Hey Jason, We work with a lot of first-time buyers here in New York doing something similar, I sent you a DM, Let's connect!

Izaiah Barba · Answer

Yes, you can buy from a wholesaler and then refi after the rehab. Just make sure your lender allows assignment/double close and will lend on a wholesale deal. Also confirm the title company is investor-friendly.

Scott Chilton · Answer

Jayson, that can be a smart path if you plan it carefully. Buying from a wholesaler can get you a good deal, but you’ll want to make sure your lender is comfortable with that kind of purchase since some lenders prefer traditional listings. If the numbers make sense and you already have a plan for the rehab and refinance, it can set you up for solid cash flow and quick equity. Just make sure you work with a lender who understands both the short-term funding and the refinance step after the rehab. Doing it right can help you build experience, earn equity early, and set you up for future house hacks with less guesswork.

Caleb Brown · Answer

If you are house hacking then you can't use a owner occupant loan (FHA, conventional, etc) to purchase. You can use hard money and refinance after. If you are looking to house hack find something on market, there is plenty of deals out there to start. Wholesalers don't allow inspections so you are also going in with higher risk.

Matthew Porcaro · Answer

You can absolutely use an FHA to house hack, you just can't buy from a wholesaler with an FHA or Conventional owner-occupant loan products.

You must buy from the deeded seller directly. You can't pay their assignment fees at closing. We've helped people in other states buy from wholesalers, but that's only if there is a novation agreement in place, where the seller has an agreement outside the purchase and sale agreement for the wholesaler to be paid out of their proceeds.

But since NY is an attorney state I really haven't seen anyone buy from wholesalers here. The good news is, you don't have to lolJust look for fixer uppers on the market, and use a 203k or HomeStyle loan to finance the purchase and renovations as an owner occupant to house hack.

Nicholas L. · Answer

@Jayson Magee

not sure what your question is exactly but, you should not buy a primary from a wholesaler.

Jayson Magee · Answer

@Abel Curiel thank you!

Jayson Magee · Answer

@Joseph Tadres I see, thank you!

Is this allowed?

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