Financing for a HUD flip!!

[Rebecca Morrell]

Hi everyone!

I have made my first foray into real estate investment this week, and subsequently I have many random posts flying around the forum, so I'm going to post this several different places...

Basically the story is this: Found a HUD property that is a rare gem for my area in Maine, and after having several contractors give estimates, my partner and I decided that it would be a great rehab flip if we could get it for a certain price.

We made a bid with him using FHA financing as an Owner-Occupant because 1.) we wanted to get in during the Owner-Occupant initial period of bidding and we do plan on living there for a while during renovations, and 2.) we don't have a lot of money to put down right now because we weren't planning on finding a great deal so soon.

The first bid was very low and subsequently rejected, and we don't feel comfortable going much higher using FHA financing in his name because we are so new to the game... However, I am interested in possibly finding a way to get private financing for the cost of the house plus repairs.

Having never worked with anything aside from conventional financing before, can anyone offer some advice or opinions on the situation? From my precursory research and understanding of hard money lending, it is most beneficial in short term flips, and usually only for the purchase price; is this correct?

In this case I would need to finance the purchase price plus some extra for remodeling (mostly cosmetic), and also be able to hold it for 3-5 months until resell.

Can anyone recommend a way to finance this deal?

Any help would be wonderful and much appreciated, as I have already learned so much from the experts on the forum!

Thanks :)

[Peter Giardini]

Rebecca... I have been following your posts and to be perfectly frank... your approach scares me.

While a case can be made that you lived in the property and therefore that may justify in your mind buying as an OO... not that you have posted your approach all over the net... if things go wrong, as they usually do... it is going to be hard to claim you didn't know what you were doing.

Also, if using hard money... almost every HML I have ever dealt with requires as part of your loan documentation that you will NOT live in the property.

It is too easy to do this business the right way... don't allow yourself to go down a path that you may later regret.

As for HMLs... given the quality of the deal HMLs will fund both the purchase and most if not all of the rehab costs. Usually up to 65% of the overall ARV.

If you are serious about this business learn to do it right.

I travel through Portland on the first and third Monday's of every month... if you pay for lunch... I will be more then willing to share specifics with you regarding how to get focused and do this business right.

Best of luck!