Help deciding on financing first flip - three ideas

[Andrew James]

I am considering 3 options to finance my first deal below.  I would appreciate any and all ideas/feedback from this excellent forum.  Thank you.

First some specifics on the deal: This is my first deal. Long on research, reading, modeling - short on experience. The house is a modest SFH in Columbus, OH suburbs....3BR ranch, 60s construction, great schools, vacant but not abandoned....probably ARV around $250 (immediate neighbors on similar lots/homes are $300-350). Will need more than simple cosmetics given age and condition, but it's also not abandoned and falling in on itself. I don't see or foresee any foundation or roof problems, but expect a near full gut job. This is an off-market deal, and I will probably not go into contract without some inspection contingencies given my margin for error on my first deal. For sake of simple math, and believe me I've run a lot of scenarios that are more detailed, let's say $250 ARV, $100 Purchase and $50 Repair costs......

Option 1:  Hard money loan 

Certainly hard money is the easiest and for a reason - not cheap.  I've looked into it and i'd be looking around 3 points + $1-2K service fee, as well as 12-13% interest only with 1 year term (no prepay penalty).  Additionally there are purchase-to-repair ratios that I'll be getting near.  Advantage here is I don't have to pursue outside investors and speed of cash access.  Frankly this is probably option #3 for me given cost, but it could rise if investors/private money are not there.

Option 2:  Convention loan for Purchase, Investors into LLC for Repairs

I can manage to acquire the property with my own cash and the monthly payment would be no picnic, but doable if I carried it as a 2nd home. It would exhaust a material portion of my own liquidity for the money down and closing/inspection costs, but I'd have a much more affordable loan than HML and this 2-stage approach seems simplest to me. Given the right purchase price (BIGGEST MUST HAVE) and a very solid idea of repairs since I will have inspected before, I could raise/beg/borrow/steal the repair funds especially since the expected return range would be much clearer by that point. In the pros column is the simplicity of conventional financing (or is it given condition?) and the relatively cheaper cost of funds than HML. Investors into and LLC seems easier to me than a bunch of small private loans documented. Any issues I'm not thinking of - like how to use/document the LLC's funds invested into a property I personally own?

Option 3:  Private money loan

I know how popular private money is on this site and it sounds excellent.  However, I have not approached anyone in my network about this deal as I'm trying to have a LOT of research done to be best ready to answer questions and act when the owner says yes.  The biggest concern I have is that most individuals in my network will not be able to cover the whole $100K purchase......and I wonder about having 3-4-5 private loans and the costs/hassles associated with that.  4th lien position?  5th?  Seems like that's getting a little silly to me, but what do I know?  I haven't yet talked to my title office about their experience with PML, but that's on the research plan.  The advantage here is PML is a loan, and will not participate in the equity upside upon sale.  Last, I haven't really explored soliciting PML outside my network yet, but this could be a solution too.

Apologies on the length.  r/RoastMe, pull no punches.  Thank you!