Financing rental property in need of repair in Las Vegas

[Dan C.]

I would like to begin by saying thanks to many of the folks here that provide such good advice and insight freely. I have been lurking around for about six months and have benefited in no small way financially from the various information posted here.

I would like to get multiple opinions on how to approach my current deal. I have a contract on a house in Las Vegas that is in short sale. I have been waiting for the approval letter since July 2012. This week the negotiator for the mortgage holding wanted updated proof of funds and pre-qual letter, and promised “good things” would happen soon. I provided him with all he requested. The property is a large 5/4 SFR that has the garage converted in a 2/1 apartment and the walk out basement converted to a 3/2 apartment. I have arranged conventional financing with the standard 20% down on a 30 year mortgage. The numbers workout as follows

Down Payment and closing: 52k

Garage Rent: 750/month (already has tenant) Utilities included

Basement Rent: 1100/month (already has tenant) Utilities included

Main House: 1650/month Utilities included rented as shared rooms as my mom will live there as well

Principle/Interest: 930

Insurance/Taxes: 320

Utilities: 600

Total Cost: 1850

Total Rent: 3500

With upkeep and vacancies figured in at 900/month my income should be ~750 month or a 15-17% cash on cash return.

The issue with the property is its condition. It NEEDS at least 10k in repairs, but COULD USE close to 30k. I would also like to build a detached garage (plenty of land) with an upstairs 2/1 apartment on the back half of the lot. I can get a prefab garage/apartment for 30k with another 30k for construction. I have 10k on hand for the required repairs, but how can I do the deal and get the garage/apartment and other repairs as well. As it is an investment property I can’t qualify for a conventional renovation loan. I am purchasing the house for 230k, current value with completed 10k repairs is 280k, and with the 60k garage 380k. Would it be best to use unconventional funding and then refinance after completed? If so, how do I do that? I am a little intimidated by hard money. I love this house and will be making it my primary residence in 4-5 years when I move there from Maryland.