Financing out of the budget property and rehab costs

[Kamil Sekulski]

Hi all,

I'm looking to buy my first owner-occupied 4-unit property and I found an interesting one, but it's out of my budget. It's a quadruplex I could buy for $850k, currently rented for $6,300 (even though it should be closer to $7,000). There's an extra space on the 3rd and 4th floor for another 4 units to be created. The seller has already all the plans approved. The cost of the rehab is ~$250,000 with estimated ARV of $1,200,000 and the total rent at $13,000, which would generate good cash flow.

I make $100k, have really good credit score and ~$100k in savings. So far I was pre-approved for $550,000 with ~$3,000 from rent and I’m exploring the best way to afford the above property (mostly rehab costs). Here are some of my thoughts:

1. Use a construction loan, which would cover all the renovation costs -If yes, which loan would be suitable?
2. Have a co-signer to be able to buy the property since I’m still able to afford paying the mortgage even with the initial negative cash flow. The issue comes with financing the rehab:
   1. Another loan and then cash-out refi? What loan would be best? Will I be able to pay the entire loan with cash-out refi?
   2. Any other good options here?
3. Find a partner/investor. Where to find one?
4. Other options?

I’m open to every suggestion and really appreciate your help! 

Thanks!