Delayed financing with Hard money

[David Maldonado]

Hey everyone,

I am considered using hard money to buy fixer uppers and then convert to long-term rentals with ADUs. The goal is to rinse and repeat. Does anyone know if purchasing a property "cash" , but with hard money, will qualify for delayed financing? 

If I go hard money, I need to have an exit strategy and I want to refinance ASAP when rehab is complete.

My other option is to wait the 6 months and by that time the ADU will have been built and will increase the value.

[Zach Wain]

@David Maldonado - Chris is spot on.  If there is a lien/mortgage secured to the subject property, than its not a cash purchase.  It needs to be an unsecured loan, so nothing shows up on the title report as attached to the home.  If the loan is secured to a different property, that is fine as well!

Another idea if you have a good (well great) network of HML's/friends with capital, is for someone to lend you 90%-100% LTV on a HML. And than do a cash out refi into a conventional loan immediately and repay the HML. You can also do a 1st HML at 70% and maybe a friend of colleague can be in second position, 2nd lien at whatever they are willing to do. Than you can do a non cash out refi immediately.

Or the easy path, as you said is to wait 6 months for the ADU to be built. Are there comps in the area with ADU's? Keep in mind the appraiser may give you a different value than you are hoping for if there is not any recent data/sales of homes with ADU's in the area. That can be a tough one for the appraiser.