Green Investor working on 2nd Deal - MN

[Jared McKie]

Hey Everyone! 

So I've started investing in April of 15' after about 12 months of searching and saving for my first deal which is a live in Duplex. I moved into the 2nd unit that needs more work and will update over the next 2 years while the other unit pays 80% of my total monthly expenses (including taxes, insurance, mortgage 10% vacancy factor, utilities Etc..). The question I am contemplating is my next steps. After those 2 years my plan is convert to a 15 year conventional mortgage, lease out the unit I fixed up and keep it as a rental and do it again at another Duplex. 

In the meantime...

I'm eager to keep moving forward but in Minneapolis/St.Paul its a very competitive market and I don't have the privilege currently to invest out of state. The capital I can provide is limited, roughly $20k to invest. I'm thinking SFR from 80K - 140K is the spot for me in a good location. May have to go to a 2nd tier suburb when looking to grow which I'm fine with having less competition.

I've created a business plan identifying my goals, investment parameters, returns etc but have yet to nail down the best strategy or strategies for my situation. 

The strategy I'm most drawn to is a hybrid flip/hold. My goal would be to find a hard money lender or private lender that would lend around the 8-10% interest only loan for 1 year. I'd purchase the SFR complete updates in 2 months and rent it out. After 12 go to a conventional lender who will lend to me on the new ARV of the property, pay the private money lender back and use the proceeds to invest in a new duplex or another SFR and do it again. The obstacles I face is 1.) finding a private money lender 2.) identifying a conventional lender that will lend on the SFR after its renovated and stable 3.) Identifying a contractor that is able to complete the work.

The other option would be to wait, save more money and work with a portfolio lender once I have enough funds saved up, however I think that would take another 2-3 years which in my opinion is too long to wait. 

Anyone willing to share advice or experiences using private money and refinancing after renovating to a conventional mortgage would be much appreciated! Or just general comments.

Thanks - Jared.