Hard Money or 203K ?

[Ondrej Brown]

First time investor who wants to house Hacking on a duplex . Which would you guys recommend using for lenders FHA 203K or A hard money lender.

[Sean Blomquist]

If you plan on owner occupying, you can use either, but there are big difference between the two.

The 203k loan has to be owner occupied, so you will have to live there.  

Upside: Lower interest, lower down payment, etc.  

Downside is your dealing with the government and you can't refinance until you've lived there 1 year to pull your equity out.

Hard money loan is not owner occupied and you can't live there while you are in the HML loan. You can do the rehab to the property, get a tenant in the other unit and then refinance as soon as the rehab is done to pay off the HML.

Upside: get the money to rehab, might be low down payment if a good deal, don't need to hire a contractor for everything if you want to do some of the rehab.

Downside: higher interest, can't live there during the HML only after refinance, If you want to pull any equity out, you would have to wait 6 months.

Hopefully this helps.  Good luck.