HML Vs Conventional Loan

[Akshay Bhaskaran]

Hello,

I'm putting together a deal for which I need advise from the great minds here.

Deal details:
Purchase: $232,500
Estimated rehab: $15,000 (flooring, paint, and bathroom door)
ARV: $310,000

Since the rehab work is very small, I'm guessing it might be done within a months' time

So, my major confusion is:
should I go with a HML, pay high closing (origination) costs, and again pay closing cost to refi into a long-term/DSCR loan
(OR)
go with a conventional 30 yr loan, and after a year do a cash-out refinance. 

Here are some numbers to help you with your feedback:

[Devin Peterson]

Quote from @Akshay Bhaskaran:

Hello,

I'm putting together a deal for which I need advise from the great minds here.

Deal details:
Purchase: $232,500
Estimated rehab: $15,000 (flooring, paint, and bathroom door)
ARV: $310,000

Since the rehab work is very small, I'm guessing it might be done within a months' time

So, my major confusion is:
should I go with a HML, pay high closing (origination) costs, and again pay closing cost to refi into a long-term/DSCR loan
(OR)
go with a conventional 30 yr loan, and after a year do a cash-out refinance. 

Here are some numbers to help you with your feedback:

I generally don't recommend hard money loans for small facelift items less than 20k. Especially if it's easy stuff like floors (snap ins) paint and door.. those are all simple things you shouldn't need a GC for. If you have great credit, see if you can qualify for a 12-18 month interest free credit card and just put it all on that. Cash out refi and pay it off before the interest kicks in. If the existing DSCR can cover the 1:1 you'll save a ton on closing costs and fees and draw request fee from doing 2 loans. Go DSCR and lock it down that way is my recommendation. I will note that you will not want ANY prepayment penalty on the first loan. The rate will be a little bit higher but if you're trying to cash out within three or six months definitely don't get a PPP.