HML to No Cash Out Refi...am I doing it right?

[Brian Bistolfo]

Hi All,

Could use some advice as I'm way out of my depth on the lending technicalities of my creative financing strategy. You all are an amazing group! Without further ado: I'm closing on my first BRRRR; I did a lot of research (and talked with a few possible lenders) to make sure that I could avoid the 6-12 month seasoning period that a regular cash-out refi requires by NOT using my own cash to buy the property.

The eventual solution was a HML from friends and family (they'll get a nice return) but none of us has originated loans before so we're trying to get it right. The goal is to be able to refinance two months from now at 75% LTV of new (post-rehab) appraised value.

Details:

- Purchase price of home is $48k, rehabs estimated at $32.5k (total = $80.5k)
- Loan for the full $80.5k originated by friends and family (funds coming technically from a trust that I do not control).

- Loan is interest-only, all principal and interest due in full in 13 months (it just says so on the note, no balloon rider).

The above loan does not have 5-, 15-, or 30-year terms.  We'll file the note and the deed of trust with the county at closing.  Any foreseeable problems that you all can see in refinancing the above?

Huge thanks everybody!