Looking for a DSCR Loan or other Private Lending

[Steve Riester]

The bullet points

Intention is a Buy-Hold / BRRRR

-Lady passes and leaves here home in southern California to 2 women. Seller A and Seller B.

-Seller A is an acquaintance to my Mom. Seller A is willing to meet with me for an Off Market deal before listing.

-I meet and pitch Seller A to do Seller Financing and she is in to it.

-However, now i hear Seller B is money hungry and just wants to sell and get her chunk. (about 215k)

-Unlisted Sale Price: 600k (buyer pays all closing costs)

-Outstanding Loan: 175k (Seller A has been paying this alone since the inheritance, about Aug '22)

-Current Mortgage: 1650/Month (with PITI) on a Variable Rate product through Fargo

-Home needs rehab estimating 75k

-Current Comps show an estimates value after repair of $800k, conservatively.

I only want to do this with lent funds so i assume i can either get a loan for;

Scenario 1

Seller B's cut of $215k + reno costs of $75k

Thats 215 against the mortgage as well so I can then seller-finance through Seller A for the remaining $385K. They pitched 5%, duration is in the air.

I then do the rehab with the 75k and refinance in <12months with my ARV and pay everyone off.

Scenario 2

Or, do I just try to get a private loan for the sale price and the rehab and then refinance under the ARV?

Looking for insights, opinions (and money), including other options i am not aware of.

I have also hunted two different occupants that would be very happy to move in to the home in November (after the rehab) and pay 2900-3000 per month. No hard commitments but it illustrates that the market is open to such a home at such a rate.

Thank you for reading this far!

[Robin Simon]

Scenario 1 looks promising if you can pull it off - but sounds like a sticky and complicated situation with a lot of moving pieces and potential for things to go wrong (lawsuits, disputes).  Scenario B probably takes some profits off the table but much cleaner and lower risk.  Probably depends on your gut feeling with the sellers and your ability to have things fully buttoned up as well as your risk tolerance