BRRRR refinance if purchased with cash vs. HML

[Julie Phan]

Hello BP friends!

I have a property that I'm looking at - and interested in the applying the BRRRR strategy.

The property is currently listed at $40K, and an approx a gut rehab comes to be $40k. The ARV/comps in the area is $140k. The rent in the area is $1100-$1200.

I have 2 options:

1) Purchase the property cash (hopefully for a lower price) - lets say $35k and then fund the rehab ($40K) cash - so my all in is $75k + closing fees. My current lender will only lend 75% ARV (max purchase price) after I close on the property. So with that, I leave most of my rehab cash in the property (40k) for the next 6 months.

 or

2) Purchase the property using private/HML - lets say at 40K and $40K rehab - total all in is $80k (not including lender fees + closing fees). In this scenario, I put 10% down with 7.5% interest only with 2-3 points. So my money vested in the property is approx $8k + closing + lender fees.

Both options require 6 months to season to pull out 75% ARV.

I would like to purchase cash for a quicker closing/better price, but I do not want to leave $40k in rehab money in property for 6 months.  

I also read somewhere about having your LLC lend you the money to get around this, anyone have experience with this?

Would really appreciate your feedback on this, thank you!