Rehab Loan Options for Live-In Flip

[Ethan Macklin]

How can I find private money lenders or other options to finance a first time house rehab and flip? Need ideas for how to structure the loans and closing deals to allow financing for this property. See my story below:

Hello. I am a 22 year old recent college graduate in STEM, who will be making a strong salary for my area (Rural Midwest). I would like to purchase a house near my new job that has potential to be turned as a long-term appreciation/flip.

In my search I have found a distressed, foreclosed house that has big upside potential. 2700 sq 4 bed 3 bath that is listed ~90-120k below FMV for similar turnkey homes. However, this home has no furnace, water heater, or AC unit (destroyed in flooding; power was shut off to house, sump pump didn't run, basement flooded) I estimate this to cost about ~20-25k and the whole house needs updating/reno.

The mortgage lender I am working with has expressed reservations about underwriting a home with no heat. I think this house could be a great deal, but I have no idea how to negotiate/acquire a loan for renovations when basically all my current cash would be going to down payment. Additionally, I think the best way to proceed would involve the seller "buying" the repairs through my secondary financing prior to obtaining the full mortgage for better terms. I have no experience with private money lending or other avenues, and am looking for any ideas or experience with a similar situation.

Also, is refinancing after rehab the way to go for live-in? Exit strategy ideas? (Rent after rehab, sell, etc...) Any help or insights would be appreciated.

Thank you!

An aside: Good Credit Score in the 780s, no college debt, starting salary about 80k, house listed for 95k in a good school district ("wealthy" part of town). I have worked for a national-sized GC firm, as a business accountant, with a local GC and electrician in high school and have been a follower of BP for several years, so not as worried about technical/rehab skills as I am about capital and deal navigation concerns.