Hard money loan to finish construction on primary residence?

[John Derheim]

Hey everyone, 

A friend of mine has come into some hardship, she sold 2 of her rental properties in an attempt to build a 1 bedroom home for retirement in northern California, she bought the land outright, and has finished 50-60% of the construction paying out of pocket so far.

She estimates that she will need 100-120k to finish the house, after paying for some unforeseen expenses in regards to her family, she has run out of money. I've recommended a hard money loan to finish construction, then a collateralized loan to pay back the hard money loan, similar to BRRRR, but for a primary residence.

Of course if I was in her shoes I would have done heloc's to access the equity in the properties that way and left then as rentals, but she decided to sell them and put all her eggs in this basket.

Does anyone have any advice on what her path forward should be? 

Her credit is not the best approx 560, and she has no income W-2 wise, but does some contracting work here and there. I was hoping she would approach this differently, but the situation has changed a lot over the last 2 years.

Thanks for reading!

[Cal Martin]

Hey John! We just had a lender come in to our brokerage and speak to us about ARMs and lending on land. If she bought the land outright then she can use that land as collateral on a construction loan to finish the project. Now I don't know about the value of land in her specific market but if it is similar to other northern California markets I hear about then it shouldn't be an issue to cover the 100-120k bid she needs to finish the construction.

Hopefully this is helpful!

Cal