Private lending advice

Mays Landing, New Jersey
Private Lending & Conventional Mortgage Advice
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Private lending advice

John Gorczynski
Homeowner · NJ · Member since 2021 · 4 posts · 0 votes

I am looking for financial advice. My wife and I recently sold our first flip and are looking to buy a forever home. The home we are looking at is in rough shape and will only accept cash offers. We are looking at offering 260k. We are able to contribute 100K leaving us with money to rehab after purchase. We still need 160K cash to buy the home. Total cost with rehab will be 340-360K. We would plan on a 3-6 month rehab time to get the home in livable condition then refinance and pay back our private loans. The ARV will be between 500-550k.

I am looking for advice on how to make up this 160k. Our family has offered to take a home equity loan and help us with our cash offer. Ideally I'd like to keep our finances separate and go with a private money lender.

Looking for any advice! Thanks in advance.

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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
3d

there are banks that specialize in these loans all in one for one fee.. the buy and rehab then roll to perm.. on the West coast WaFED did a lot of this.

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  • Erik EstradaBusiness Member
    Lender · Member since 2022 · 6k+ posts · 1k+ votes
    3d

    Hey John,

    Most private lenders will not finance an owner-occupied purchase. You might want to look into owner occupied loans to achieve this.

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  • Dan Duenas
    Lender · Member since 2026 · 33 posts · 19 votes
    3d

    You're right to keep the family money out of this — that's the smartest sentence in the post. If the rehab runs long or the refi stalls, family in the middle of the deal is how holidays get ruined.

    On the $160k: what you're describing is a short-term private first-lien loan, so shop it like one, not like a favor. Market terms for a 6-month gap on a distressed purchase are roughly interest-only at 8–10% with 1–2 points — but write the note with an extension option (6 months + a 3-month extension at a higher rate), because 3–6 month rehab timelines are exactly where these deals slip, and a private lender without an extension becomes a very expensive partner.

    Two things that actually matter:

    1. Lock the EXIT before you close. Line up the takeout refi now — get the permanent loan pre-arranged off the finished value, not assumed. Most gap-funding pain comes from refis that were hoped for, not arranged.

    2. Paper it like strangers. Recorded mortgage, title policy, written draw terms if the lender funds the rehab too. It protects both of you.

    One routing note: this is a primary residence in NJ, and the exit refi is out of my lane — I only do primary-residence loans in Nevada. My manager Paulo Maria is licensed for primary residence in NJ and can run the takeout numbers with you before you close. Happy to make the intro — Dan

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    • John Gorczynski
      OP
      Homeowner · NJ · Member since 2021 · 4 posts · 0 votes
      3d

      Dan, This is very helpful.

      I have a estimated ARV but its hard to say what the market will be like in 6 months. How would I be able to lock in a refi now on numbers that are 100% accurate. I would be happy to talk with Paulo! Thank you!

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    • Dan Duenas
      Lender · Member since 2026 · 33 posts · 19 votes
      1d

      Honest answer: you can't lock numbers that are 100% accurate, and you shouldn't try. What you lock is the LENDER and the LOAN — and you underwrite the deal at the conservative end of your ARV. If the refi works at $500k, the $550k case is just upside.

      "Locking the exit in" means three things, all doable this week:

      1. Pick the takeout lender now. Confirm their seasoning rule in writing — most want 6 months of ownership before they'll use appraised value instead of what you paid. That rule is what decides how long the private money is tied up.

      2. Run the refi at your LOW ARV and today's rate. If the payment works and the proceeds pay back the $160k, the deal survives bad news.

      3. Get the checklist: what appraisal, what reserves, what docs they'll want at month 6.

      On the intro — yes, I'll connect you with Paulo. One call and he'll tell you whether the takeout works at your conservative number, which is the only number that matters. — Dan

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  • Heath Thomas Jr
    Lender · Baltimore MD · Member since 2015 · 202 posts · 67 votes
    2d

    They say only cash offers because they don't think it can qualify for a loan. Both the Fannie Homestyle and FHA 203k loans would be a good option for you because the lender appraises the home based on the ARV taking into account the renovation. These loans also cover the purchase and renovation so no need to refi once the work is compelted.

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  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    2d

    you will need a true private lender who will lend to future owner occupant or reach out to banks that do all-in-one construction to perm type loans

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  • Adam Summerer
    Lender · Franklin, TN · Member since 2026 · 73 posts · 13 votes
    2d

    Erik's right that most private lenders won't touch an owner-occupied purchase. Before you go the family route, ask the listing agent if the seller would take a renovation loan offer (FHA 203k or a conventional renovation loan) instead of cash, if the house is financeable at all that gets the rehab into one loan. If it truly has to be cash, the family HELOC with a written note is workable, just get your refi lender to tell you upfront how long you have to own it before they'll use the new appraised value instead of what you paid, because that timeline is what decides how long the family money is tied up.

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  • Matthew MorrowBusiness Member
    Investor · PA - NY - NJ · Member since 2019 · 521 posts · 184 votes
    1d

    @John Gorczynski Congrats on the first flip. Since this will be your primary, I'd look hard at a renovation loan like a 203k or Homestyle, or a construction-to-perm from a local bank, before private money. Most private lenders won't touch owner-occupied, and the ones who will are pricey. If you do go private, make sure the refi still works at today's rates even if the appraisal comes in on the low end of your ARV.

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