Will this work?

[James Vann]

So, i am wanting to do some real estate investing- but currently I have been renting my own residence for the last 5 years. I am paying way more in rent than it would cost me to make payments on a similar home. In fact, I buy an REO that is twice as large and just needs cosmetic work and minor plumbing and the it would cost me half of what I am paying in rent. So, for my first investment, I plan to buy a home to live in.

Now, here is the problem- banks won't finance me because they make up their own numbers for student loan payments, rather than accepting my actual payment. So I am looking for a hard money loan. Most HML don't do "owner occupied" (I'm having trouble finding one that does Missouri and less than 50,000, period).

So if I buy the home, put it into my LLC, and lease it back to myself- it isn't owner occupied, is it?

Even paying the HML high interest I still free up a significant amount of income that is going to rent- which can go toward making a massive down payment to buy the home back from the LLC 9 and pay off my HML :).

What problems might I run into doing this kind of a deal?

[Jeff S.]

As far as the house appraising you need to do research. Find comparable sales (good Realtor maybe?) with financing.

If you can prove to yourself the after repair value is there then you can prove that to the HML. Find an experienced HML to look at it for you, find sold comps w/ financing and get bids. Tying up the property w/ a contingency might be the best bet for you.

Find a Realtor that works that area and if they are any good they should be able to tell you what you need to know.

Find out who is making loans in the area (via RE agent) and prequalify.

If you find out you can't qualify for regular lending your risk goes up. Might consider a partner.