Hard Money Refi vs. Conventional Loan Refi

[Nathaniel Larrea]

I'm doing hard due diligence on a property that would be my 5th deal (2 Flips + 2 rentals).  Before I commit to a contract I am exploring both options of a conventional refi loan on an existing property i own out right since I have good credit and work a full time job OR...going hard money refi on it.

Reason why I'm having a hard time deciding is due to timing.  The conventional loan obviously has better rates which I qualify for but by the time I close on this existing property going conventional, the new property will already be at auction and lost.  However if I go hard money, I can refi my existing property sooner, pull the cash in less than 30 days in time to cover the 25% for the 5th deal (the other 75% will be  a different PML).

That said, should I wait to get approved on the conventional and risk losing this other deal or go hard money, get the 5th deal and deal with the higher interest on the hard money?  If I do hard money, does it make sense to conventional refi it say after a year or 2 and pay the prepayment penalty for the hard money loan just to have a better rate or keep the hard money loan until I decide to sell the property?

Here are the numbers

4th deal: $150,000 ARV x 75%=$112,500 loan x 8.5% on a 7/1 ARM= $1800 gross rent - mortgage - rehab/maintenance-taxes/insurance =$100+/- Net/month

5th Deal: $135,000 purchase + $15,000 rehab=$150,000 total investment (25% from the 4th deal, 75% from PML)= $2400 gross rent - PML Loan - rehab/maintenance-taxes/insurance =$900+/- Net/month FOR FIRST YEAR. After 1st year we would BRRRR it and have even more cash flow since we would go conventional Refi at that point.

Yes I know the numbers don't look sexy on the 4th deal as far as cash flow but its the difference of adding to my portfolio and getting this 5th deal that could make us a lot of money down the loan due to its location.