Financing Down Payment for BRRRR property

[Rob Terpilowski]

Hello BP,

I'm looking at my first BRRRR deal on a duplex in Tacoma, Washington and am wondering if I should put any of my own capital in or attempt to finance as much of this as possible and keep my powder dry for other opportunities. A high level overview of the numbers.

Purchase Price: $125k
Rehab: $100k
All In: $225k

ARV $320k

I currently have hard money lined up at 3 points and 12% interest, who will lend on 80% of the purchase price and 100% of the rehab.

Which would put my initial acquisition cost at about  $29k ($25k down + $4k origination fees)

My contractor, who is also a real estate investor may be interested in lending on the $29k at 9%-11% interest, but how would the debt be secured?  Would it be a junior lien to the hard money lender's, or would it be unsecured?  I'm planning on obtaining a lawyer to handle specifics, but want to get others' general thoughts on this.

Other options available besides using my cash would be either a HELOC at about 4.5% or a loan from my 401k is another possibility.

The goal would be to refi after 6 months, and pull out my original capital, which at the same time would still allow the property to cash flow nicely.

I have on my list to read the BP guide on buying property with no/low money down, but don't think I'm going to get to it in the next few days.

Thanks,

-Rob