Conventional Loan Wholesale

[Tanner Barnes]

If I had enough time and am already preapproved with plenty of down payment money would a bank give a conventional loan if I wanted to live in the property a wholesaler is marketing while it's being fixed up before renting, say for a year?

I mean the bank just wants me to live there, and if I try to live there and decide it's not for me they can't stop me from moving. I've heard from some more open minded lenders it's not an issue unless you fail to make a payment when not living there if I was to move out.. 

[Andrew Postell]

@Tanner Barnes to answer your question directly, yes, you can do this.  Admittedly, it's rare that we have 30 days to close on a wholesale deal (at least in my market) but you can absolutely 100% use conventional money to purchase.

I do want to point out 2 differences using this strategy though:

1. Conventional lending (meaning Fannie/Freddie) will ALWAYS require a down payment. On investment properties we cannot use that 203K loan referrenced above but Fannie Mae does have a renovation loan, Homestyle, as an alternative. But even if you purchase for $50k...and the home is worth $100k...you will STILL need a downpayment. 15% is the minimum for Single Family Homes. So in this way, Hard Money Loans are superior for us as investors because they would not require a downpayment if you purchased for $50k and the home was worth $100k. In theory. I'm sure if it's your first time working with a HML they would likely require SOMETHING out of pocket from you to feel comfortable...but CONCEPTUALLY Hard Money Loans are better when the numbers are this slanted. I hope this makes sense how I am describing this.
2. And Fannie/Freddie loans are really only used if you are buying and holding....in general.  They won't have any prepayment penalties but if you are flipping limiting your out of pocket expenses is really important and that's why Hard Money...or some other aquisition loan....beat the conventional loans.  But if you are keeping the property long term, then those Fannie/Freddie rates are just so much better that it makes sense to use them.

*WHEW*  I hope this wasn't too much information but I hope this does help in some way.  Thanks!