NOOB Question: Whats my next best step for pre approved financing

[Marc Estepa]

Background:  Currently stalking a house.  It’s an animal hoarder situation, and the family has put the house up for sale.  Conservatively, the homes in the neighborhood and nearby comps are worth $500K.  They are asking for $385 and have had it on the market for close to a year.  The family has been standoffish with potential buyers and won’t budge on price as they continue to work on it.  

As time has gone on, they have hired a realtor, are slowly softening their stance and opening up to offers.  From what my realtor says, it potentially requires about 100K in renovations.

 Based off my analysis on rents in the area and what I can do it for, I need to negotiate it much lower.  I intend for it to be a primary residence when all is said and done but will be leaving in a few years and will use it as a rental investment property.  

Being that this is potentially my first true investment property, I was looking at financing through an FHA 203K loan. My numbers are based off that loan. I have $20K in cash on hand I'm comfortable with using for a downpayment.

As my luck in 2020 would have it, the 4 lenders I’m talking to have said that the FHA 203K loans are on hold due to CoVID. The one lender that is reinstating FHA 203K loans can’t approve it because I am just coming out of forbearance on my other properties and need to see 3 continuous payments before approving it.  That means it can’t happen until at least January 2021.  

The bank I had these mortgages in forbearance with have already cleared me of it but have unfortunately put their FHA 203K program on hold due to CoVID. That's what drove me to go to other lenders.

As a result, I'm looking at other options outside of the FHA 203K. Can I get preapproved for a conventional loan and then do hard money for the renovations? What about doing the whole thing (purchase and renovations) with hard money? Can I do a cash out refinance on the hard money loan with a conventional loan afterwards? Does that even make sense?

Sorry if that’s a basic question.  I feel like it is.  Just trying to understand the mechanics on this before I pull the trigger.  I want to make sure I have the financing squared away before I approach them and try to make an offer!  Thanks in advance!