Help deciding between two loan options

[Benjamin R Nash]

New investor just starting out and looking for guidance. Buying a SFP for rental at $120K. Needs $50K in improvements. Improvements will take 2 months. ARV will be $220K. Using a line of credit to purchase property cash and I will fund the improvements. I will then roll the property to a conventional loan. Question is that I have 2 options from my lender and trying to decide what would be best.

Option 1 

Conventional loan 75%LTV 30 year at 5.25%. Must wait 6 months from purchase to do the loan.

Option 2

Portfolio loan 80% LTV 10 year balloon @ 6% based on 25 year amortization. Do not need to wait 6 months and can do the loan as soon as improvements are done.

It would be nice to get the cash back sooner than 6 months but not necessary. I see pros and  cons to both. What would you do?

Thanks in advance for the help!

Ben

[Chris Mason]

You didn't mention your location, so I'll use what I see on one of the hot coastal markets (SF Bay Area) where supply/demand for skilled labor is out of whack in favor of the skilled labor.... and you can file this post in the what you "need to hear" category, not "want to hear." :)

In all probability as a new investor, you will NOT be getting everything done nearly as fast as you think, making the six month wait moot. Tripling your $50k 2 month timeline puts you at six months, and there's your realistic timeline (unless you're willing to blow up that $50k budget by overpaying by a lot for speed). General contractors who do good work are busy, and they do not give a damn about your "proposed" or "desired" timeline unless you're a bigshot with a historic track record of throwing them multiple $250k jobs per year (oh, and GCs completely ignore "but I'll send you my future business!" promises). 

Plan for option 1. And if you somehow get lucky then explore option 2. 

Also, vote to tear out half the computer labs in our high schools and restore them to being wood and auto and other similar shops like they once were, next time someone gives you the opportunity to do so. We need more actual carpenters, not more failed software engineers....