Private lending advice

Mays Landing, New Jersey
Private Lending & Conventional Mortgage Advice
2wFollow

Private lending advice

John Gorczynski
Homeowner · NJ · Member since 2021 · 4 posts · 1 vote

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.

1Reply
2,275 views

Most Popular Reply

Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
2w

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.

Podcast Guest on Show #222
JLH Capital Partners51 Review
WebsiteView Page
3Reply
See this reply in the discussion

18 Replies

Jump to latestLatest
  • Erik EstradaBusiness Member
    Lender · Member since 2022 · 6k+ posts · 1k+ votes
    2w

    Hey John,

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

    [email protected]818-269-7983
    LuxePrivate Investments LLC 572 Reviews
    WebsiteView Page
    2Reply
  • Dan Duenas
    Lender · Irvine, Orange County · Member since 2026 · 57 posts · 29 votes
    2w

    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

    1Reply
    • John Gorczynski
      OP
      Homeowner · NJ · Member since 2021 · 4 posts · 1 vote
      2w

      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!

      0Reply
    • Dan Duenas
      Lender · Irvine, Orange County · Member since 2026 · 57 posts · 29 votes
      2w

      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

      1Reply
  • Heath Thomas Jr
    Lender · Baltimore MD · Member since 2015 · 202 posts · 67 votes
    2w

    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.

    1Reply
  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    2w

    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

    7e investments53 Reviews
    WebsiteView Page
    2Reply
  • Adam Summerer
    Lender · Franklin, TN · Member since 2026 · 110 posts · 29 votes
    2w

    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.

    1Reply
  • Matthew MorrowBusiness Member
    Investor · PA - NY - NJ · Member since 2019 · 884 posts · 311 votes
    2w

    @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.

    [email protected]484-791-6200
    CORE Team | Realty ONE Group Supreme548 Reviews
    WebsiteView Page
    1Reply
  • Nyisha Walton
    Lender · Houston, TX · Member since 2026 · 95 posts · 26 votes
    1w

    Hi John, for an owner-occupied purchase-rehab that has to close cash, a construction-to-permanent loan from a bank is usually a better fit than private funding. If you ever look at a rental or flip instead, we do investment funding in 30+ states and I'm happy to compare structures.

    0Reply
  • Gregory AcsPro Member
    Lender · MD · Member since 2025 · 244 posts · 93 votes
    1w

    Congrats on your first successful flip! Since the property needs significant work, I'd compare private money and renovation financing options before borrowing against a family member's home.

    Make sure to account for interest, fees, holding costs, and possible rehab delays. I'd also confirm your refinance options before purchasing, since the property will eventually become your primary residence.

    Have you spoken with any lenders about financing the purchase and renovation together?

    1Reply
  • Rick Matinez
    Lender · Nevada. · Member since 2026 · 11 posts · 7 votes
    1w

    This is a great position to be in - you have a really solid deal here.

    At $260k purchase + $100k rehab = $360k all in on a $500k-$550k ARV, you're at 65-72% of ARV all in. That's exactly what private lenders want to see. You have a ton of equity protection.

    If you want to keep family out of it (100% get it), here's how I'd structure this if I was funding it as a private lender:

    1. Structure it as a bridge, not a long term loan:
    You don't need a 30yr loan. You need $160k cash to close, until you can refinance. Private money is perfect for this.

    2. Typical terms for this size deal:
    On something like this we'd usually be at interest-only payments,. No prepay penalty. So on $160k, you're looking at ∼$1,333 - $1,600/mo to hold it while you rehab.

    3. How to make it safe for BOTH sides:
    Even if it's private money, do it like a bank would:
    - Promissory Note + Deed of Trust recorded against the property
    - Lender gets title insurance / lender's policy

    This protects you and makes a future refinance way cleaner.

    Honestly, taking the family HELOC is cheaper money, but I understand wanting separation. If you do private money, just make sure the $100k you have is seasoned in your bank for 2 months so your refi lender doesn't question it.

    If you want, post your market - some private lenders (like us) are state specific.

    1Reply
  • Ben Whittington
    Lender · Delaware Valley (NJ/PA/DE) · Member since 2024 · 11 posts · 5 votes
    1d

    Hey John, I'm a private lender (just me) based out of Burlington County, NJ. I sent you a connect request - I'd love to chat when you have the time!

    1Reply
  • Ryan BakerBusiness Member
    Lender · Strongsville / Cleveland, OH · Member since 2026 · 62 posts · 11 votes
    1d

    Congrats on the flip, and good thinking on keeping the family's finances separate. One thing to know up front is that many private lenders won't fund an owner-occupied purchase, so the structure matters more than the lender name. Since you plan to refinance after a 3-6 month rehab, a short-term bridge or purchase-plus-rehab style loan with a clear exit could fit, and with roughly $100k in and strong ARV you have solid equity cushion. Lenders will want to see your rehab budget, timeline, and your refinance qualification so the exit isn't a surprise. I'm a lender who does investor and bridge financing, so I'm happy to walk through your options on a quick call, my direct line and email are on my profile.

    (Drafted with AI assistance.)

    [email protected]330-548-3340
    1Reply
  • Juan Hasbun
    Lender · Fort Lauderdale, FL · Member since 2020 · 38 posts · 8 votes
    22h

    From a private lender perspective, this actually sounds like the type of project that's often financed successfully, assuming the numbers hold up and the property qualifies.

    A few thoughts:

    On paper, that's a healthy equity spread if those numbers are accurate.

    If you have $100k available, I'd first look at whether a private lender would finance a portion of both the purchase and rehab rather than trying to source the entire $160k through friends and family. Many bridge and renovation lenders will lend based on a combination of purchase price and projected after-repair value, though leverage varies significantly by lender and borrower experience.

    A few things I'd be focused on before moving forward:

    • Verify the ARV conservatively. Make sure the deal still works at the lower end of your estimated value range.

    • Get a detailed rehab budget. First-time and second-time flippers often underestimate costs and timelines.

    • Have a refinance plan now. Don't wait until the rehab is complete to learn whether you'll qualify for the permanent financing.

    • Maintain reserves. One of the biggest mistakes I see is putting every available dollar into the acquisition and rehab, leaving no cushion for surprises.

    Regarding family versus private lending:

    Family money is often the cheapest money available, but it can become the most expensive if the project encounters delays, cost overruns, or disagreements. If you do go that route, I'd strongly recommend documenting everything exactly as you would with a third-party lender.

    A private lender can create a cleaner business arrangement because expectations, repayment terms, and timelines are established upfront. The tradeoff is higher borrowing costs.

    One question I'd ask myself:

    If the answer is yes, that's usually a good sign you're underwriting conservatively.

    Overall, based on the numbers you've provided, I'd spend less time worrying about where the $160k comes from and more time validating the ARV, rehab budget, and refinance exit. That's what will ultimately determine whether the project is successful. The financing is usually the easy part if the deal itself is solid.

    Congrats on completing your first flip, by the way. Many investors never get that far. The fact that you're thinking through the structure before making an offer is exactly the right approach.

    1Reply
  • Ryan BrownPro Member
    Real Estate Agent · Louisville, KY · Member since 2022 · 65 posts · 20 votes
    22h

    This is exactly the type of deal I’d take to a small local bank before going the private or hard money route.

    I’m not sure what that landscape looks like in NJ, but here in Louisville we have several smaller banks that hold loans in-house and have more flexibility to look at the whole deal rather than trying to fit everything into a standard mortgage box.

    With the cash you’re bringing to the table and your plan to make this your long-term home, I’d start calling those banks and asking about purchase-and-renovation financing for a primary residence. Others have mentioned construction-to-permanent options here, and that’s worth exploring as well.

    If you find the right fit, the financing could be considerably cheaper than private or hard money. I’d ask for someone who handles portfolio or construction lending rather than stopping at the first person who says the house won’t qualify for a conventional mortgage. Be upfront about the property’s condition and your plans to live there—that’s the deal you need them to evaluate.

    [email protected]502-889-0122
    1Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free