Combining Hard / Private Money Lenders & Seller Financing for BRRR

[Jason Hatfield]

Hello BP!

I'm looking at a deal that would combine these two methods but I'm unsure if a HML or PL would do the deal as they would have the second lien position. Does anyone have experience doing this?

I would put 10% down and have the seller financing the other 90% of the purchase.  I would then be looking for the lender to cover rehab and holding costs.  The plan would be to refi as soon as its seasoned and cash out both the seller and the lender.

Is this a common strategy? How would it differ if I was assuming an FHA loan or using a Subject To deal?

As always, thank you for the help!

[Ryland Taniguchi]

Originally posted by @Jason Hatfield:

Hello BP!

I'm looking at a deal that would combine these two methods but I'm unsure if a HML or PL would do the deal as they would have the second lien position. Does anyone have experience doing this?

I would put 10% down and have the seller financing the other 90% of the purchase.  I would then be looking for the lender to cover rehab and holding costs.  The plan would be to refi as soon as its seasoned and cash out both the seller and the lender.

Is this a common strategy? How would it differ if I was assuming an FHA loan or using a Subject To deal?

As always, thank you for the help!

Not enough info here to answer the question. Not sure what the equity is on the deal.  Not sure if the seller owns and free and clear or has a mortgage.

But here is a suggestion. Take out a HML or PL in first position to (1) pay the seller and (2) pay for the rehab. Pay the seller a good amount of money in exchange for them taking second position on the seller financing. Rehab, flip and pay off the seller within 6-months.

HML and PL generally don't like second positions unless you have at least 20- 30% equity in the deal. In my experience, it's easier to get a seller of a free and clear property to take a short term second than to find a PL or HML to do the second.