HML Strategy for Down Payment

[Josh Shubin]

Hey guys,

Just wanted to ask about hard money lenders and how it can work with getting a loan through the bank. I currently do not have enough for a down payment on a home that is valued at $250,000, but know that through some renovations, I can increase the value to about $290,000 (after talking with a local realtor on what would need to be done to increase the value of the home). Is it feasible to get a HML to provide the funds for the down payment, and I front the money for the repairs? I was thinking of doing a 3 year deal with them, at 5% interest only. I was going to rent the place for 2 years, then try to refinance the property with another bank and pay back the loan to the HML. (The 3 year thing with the HML is just in case I can't get the refinance loan on the first try.) I would like to keep the property as a rental property, so this would not be a flip job… just a Buy, Rehab, Rent, and Refinance situation. I am a little apprehensive about the market right now and the feds increasing interest rates. So any advice as to if it is feasible to get the HML for the down payment, along with the advise on whether to wait on the market another year or so would be much appreciated!