Seller financing + private money rehab?

[Kyle Shepherd]

Rookie question here.

Is there a way to do a seller-financed arrangement for the purchase part of a property, but do a private/hard money loan for the rehab costs on that same property, and then refinance ONLY the rehab costs into a conventional loan at the end of 12 months WHILE still paying the sellers for the actual house purchase price?

[Don Konipol]

@Kyle Shepherd

In actuality the owner financed mortgage would have to subordinate to the rehab loan as well as the takeout loan, and both lenders would have to allow a second.

The glitch in the process is that almost all lenders want to see skin in the deal by the borrower. However, the combination of a desperate seller, purchase price way under market value, hard money lender concerned only with loan to value, takeout private mortgage fund, and strong credit/assets borrower may increase the odds of getting it done. The rule of financing is that the less you need the money, the easier it is to obtain. So unless you’re in that position, all other factors have to fall into place.