Buying First Home with FHA Loan & Using Private Money for Rehab

[Mitchel Gendelman]

Hi BiggerPockets community, 

Does anyone have any experience with using an FHA First Time Buyer Loan to fund a multi-family property (up to 4 units), and leveraging private funding (not hard money) from a friend or relative to finance the rehab? I couldn't seem to find much out there relating to this tactic. I am aware of the FHA 203k loan option but would like to bypass all of the red tape and lengthy process if possible. Still open to the idea, but trying to come up with additional creative options to finance my first home.

Numbers aside, the idea would be to purchase a multi-family property using my own funds/FHA loan, receive private funding for the rehab, create instant equity in the property with the rehab, and re-finance after 12 months into a traditional mortgage and pay back the private lender plus interest. Am I missing anything here? Are there any limitations funding a property with an FHA loan and using private money for rehab? Can I pay back the private loan plus interest through a refinance? How can I best pose this idea to my private lender to show value for them as well? Any and all insight is extremely appreciated. Thanks!