Help with Funding more properties

[Chris Perrin]

I am going to be closing on my first multi family house within the week, a 3 family. I used an FHA loan and will obviously be an owner occupant. It took me a while to find and have my offer accepted so I am looking ahead to my next properties. I'm planning on using the BRRRR system to start and I have already spoken with my mortgage broker about refinancing in 6 months. I don't have enough cash to buy a property outright in my area, Worcester, MA, so I am looking for other means or any advice anyone could offer so that I might be able to start getting on top of my next property before the 6 months is up and I refinance to a conventional loan on my current property. I am hoping to get the ball rolling and make this year a successful one. Any help would be greatly appreciated.

                                                                                                                                         Chris

[Ann Bellamy]

Chris, if you are going to buy multi's, fix up, rent out, and refi, then you can use hard money for the acquisition, and conventional for the refinance.  Hard money lenders provide a portion of the acquisition, and all of the rehab money. 

Most hard money lenders, myself included, require that you take title in an LLC or Inc. You therefore, when you refi, will need to refi with a commercial loan, not a residential loan, so your current mortgage guy probably won't know about those. For small multis in the commercial loan space, you'll need to talk to local banks and credit unions: the commercial lending department, not the residential mortgage department. There is a big difference.

There are also investment residential loans from your mortgage guy, but you'll still need 20% down, it has to be livable, and you have to finance the renovations yourself.

I strongly recommend that you use a local hard money lender, not a national lender, as local connections and market knowledge matters a great deal, both in evaluation of the property, and in keeping closing costs low and time frames short.  Call me any time, or check my website or podcast below in my signature.