Private money "wait time" and how to get around it.

[Brian Barfoot]

Hi all,

       I'm being told that if I am going to take on private money that it's best to have it in my account three months before starting the prequalification process to avoid the "no gift money for an investment property" rule. This seems like an absurdly long time and I'm wondering how people get around this. Do you front the money from your own funds in some creative way and then pay yourselves back when the private money comes in? Is there an exception to the rule that my mortgage originator isn't telling me about?

Background info: I'm looking to pick up my third house and in this market I would be buying in the 30-80K range. I have some cash reserves and a line of credit that I could leverage if necessary but not enough to get 20% down plus closing costs on a house in the upper end of that range.

Thanks,

        Brian