All Forum Posts by: Sean Blomquist

@Myriam Joseph you are going in the right direction.  The hard money is used to acquire and rehab the property to build the equity into it.  When you do the refinance after the rehab is done, you are not doing a cash out refinance in most cases, just a rate and term refinance to pay off the hard money loan and keep your overall mortgage lower.  If you do want to pull some equity out of the property on that refinance, you would most likely have to wait for at least 6 months to do the refinance.  Doing the rate and term to leave the equity in the property, can be done as soon as the rehab is completed.  Check with your refinance lender to see their guidelines, but if they go based on Fannie Mae's without any overlays, that would be the case.

Good luck!

@Melissa Harris reach out to @Justin Cooper for advice on this.  He is a great resource about this subject.

@Beth Davis reach out @Justin Cooper about getting BRRRR done in CO.

@Ray Cheers a HML is used for investment property only (fix and flip, or fix and hold property). They are going to lend based on the ARV (after repaired value) up to a certain %. Typically that is around 65-70% of ARV. Some will cover as much cost (purchase, repairs, closing costs) as they can with that loan, while others may want you to put a certain amount down. You use the loan to acquire and rehab the property. Once you are done with the rehab, you either sell the house or refinance the house to pay the lender back. If selling, you will profit the difference between the sale price and your loan payback with your interest paid. If refinancing, you have built equity in the house by doing the rehab and you should be able to cash flow with your incoming rent and the loan being a lower LTV than the value of the house.

Hopefully that is a good starting point for you.  You can find out more info on BP as well as plenty of other sites on the internet.

Lynn Gleason or Nicole Paulson at Title Smart are the best.

@Ray Cheers what questions do you have?

@Caleb Wilson here are a good real estate attorney and accountant.

Jaren Johnson https://johnsonlawmn.com

@John Woodrich is an accountant and investor

Let me know if I can help you with anything else.

@Anthony Brancato I don't know of any lenders that would go as high as 90-95% unless that was only towards the purchase. Most HML's are 65-70% of ARV.

@Joshua Herald most HML's won't loan on an owner occupied property. That changes the loan from a business purpose loan into a consumer loan. You can structure it the way you described, but if the lender knows that is your intention, they most likely wouldn't lend on it.

@Cole Britting that one is a little different.  You lose value for not having a garage, but add value for finished sq ft.  Tough to say if it is a wash or not.

Also, make sure you check with your local building code, because they may or may not have an issue turning a garage into livable space.