Financing Distressed Property in Historic Neighborhood

[Thomas Wood]

BP Community,

First let me apologize in advance if I'm posting in the wrong forum.  This is my first post so I thought I'd make it personally memorable by tying it to my current real estate challenge.  As my question likely reveals, I'm new at this so thank you in advance for your patience and advice.

I'm trying to acquire and restore a distressed property in a historic neighborhood of Atlanta, Georgia. Currently owned by an in-law and has about $100k mortgage on it. Two year old appraisal values at $400k as it sits. I have plans and estimate for restoration that require about $600k to get to a state where home could be occupied. Based on comps in neighborhood I estimate ARV of +$800k.

My challenge is finding a lender that will finance the project.  I thought I needed something like a jumbo loan to acquire the property for cost of the note and finance the construction effort.  Was talking with Fidelity in Atlanta but they pumped the brakes when Ameris acquisition occurred.  

No national lender seems to offer this and my credit union doesn't do anything like it either. This leads me to believe that I'm looking at this situation wrong and/or talking to the wrong people b/c while there's risk here comps in the neighborhood should support a healthy ARV (but I lack knowledge and experience to prove that assumption).

What am I missing?  I don't have the cash to take on the deal even if I liquidate everything but have the cash flow to support financing.  My concern with simply buying out my in-law is that b/c the property is distressed, I doubt I could get an insurance policy to cover it until such time as I can raise funds to rehab.

I appreciate your advice in this matter.