Using Hard Money for Owner Occupied Rental

[Justin Tyler]

I am planning to use a combination strategy of BRRRR and house hack for my first deal and want to use hard money to purchase the property. I was told by a few hard money lenders at a local REIA meeting that it will be nearly impossible to find hard money lenders willing to finance a property that I plan to live in. They said something about not being able to foreclose on the property if for some reason I filed for bankruptcy due to being owner occupied.

I am hoping to some of you in the BP community can tell me if this is true or not? If this is true, is this only the case if I plan to live at the property before refinancing and paying back the hard money lender? I don't see why it is an issue for me to live at the property once I refinance. I appreciate any feedback, thanks in advance!

[Justin Tyler]

I really appreciate the feedback @Jeff S. Mostly all of the properties I am looking at are in bad shape and require decent size rehabs. As far as I know, most conventional lenders prefer not to lend on properties that aren't move in ready. I have a very good salary job and plan to get pre-approved for refinancing before closing on a deal as I will need this to pay back the hard money lender.

The part I am having a hard time understanding is if I get pre-approved for refinancing (which I'm confident I will be), why does a hard money lender care about what I do with the property once I pay them back and they are no longer involved? The way I see it is I am planning to do a normal BRRRR just like tons of other people do and have done in the past. What's to keep me from not disclosing the fact that I plan to live at the property and rent out rooms (if single family)/units (if small multifamily) once the rehab and refi are complete. I am just an honest guy and would prefer to go about this in an ethical way.

The properties I am looking at are in Delaware, yes. I will definitely check out the lender resources you mentioned. Thanks for taking the time to answer my questions and help me figure this out!