Tri-plex purchase questions

[Andrew Wilkins]

My wife and I found a property we want to buy yesterday. We are planning on going to view it formally tomorrow. We did drive by the neighborhood to check it out, it's definitely a low income area but has potential. The Tri-plex is a 2-1, 1-1 and studio set up. Market rents here is about 1100-1200 for a 2-1, 1k for a 1-1, and 800 for a studio. We have a SFH that we've been house hacking in and has appreciated by about 70k already. Our plan is to take a hard money loan for the tri-plex, pay off all our CC debt (about 30k, yes we were stupid in the past but we have learned better) and have about 30k left for a down payment for a mortgage to replace the hard money loan. The tri-plex is a cash only sell. We are planning on living in the 1-1 unit for a year then move in with my wife's mother to support her in her old age. Cashflow will be very low for the first year, but will cover expenses, then will be about 700-800 per month moving forward.

Is this strategy viable? How difficult will it be to get the deal funded through hard/private lending. Do yall think the mortgage process will be difficult? Any pitfalls to watch out for? any advice welcome and thank you in advance.

[James Hamling]

I don't follow the math @Andrew Wilkins, it makes 0 sense to me. You have $70K equity in current property, and are going to get a Hard Money Loan, the most expensive funding on earth, to purchase a tri-plex. THEN pay down consumer credit cards.... As I read it is very apparent that your over leveraging, and that means is 1 minor thing goes wrong the entire house of cards collapses and you will loose everything. 

Short short answer; DONT!. 

There is risk, and then there is tap dancing on a metal roof in a lightning storm after a liter of Jack kind of risk, follow? 

If you have to use HM to do a buy & hold, it's not time. HM should be used EXCLUSIVLY for short term functional projects, such a finance bridging (wholesales) and flips. On a standard buy & hold if you gotta use HM, there is a reason nobody else will fund you, namely portfolio lending via local banks. 

You should 1st work on clearing your negative debt, if this is a good deal great, jump on it and wholesale it, flip it, get the funds to clear your debt so you can get to the real work instead of screwing around up on the roof in the lightning betting things will work out a-ok, no not a path to good outcomes.