BRRR Live In Hard Money

[Steve Francis]

Hello BPers,

I was hoping to get some advice around Live in BRRR strategy or Buy, Rehab, Live, Refinance (BRLR)!

We currently own a twin in the Philadelphia suburbs, Conshohocken. With 3 kids we are out growing the house and could use a backyard. My plan is to find an off market fixer upper property in the Conshohocken/Plymouth Meeting area and utilize hard money to acquire and rehab and then move in and refinance. Then rent out the twin. Any advice or tips would be appreciated. Currently reading David Greene's BRRRR book so I'm sure I'll find some tips there as well.

[Ann Bellamy]

Much of the reason that HMLs won't lend when you intend to move in (even down the road) is the lending laws.  Dodd Frank changed that landscape signficantly.  If you intend to live in it eventually, then in most states you must use a residential lender licensed to provide residential loans.  Residential loans have lots of compliance requirements.
Most hard money lenders are not licensed, and don't want to deal with all the requirements to provide a residential loan.  There are many more restrictions involved.
In NH, for example, the use of the funds determines the requirements for a residential or commercial loan.  If the funds are to be used to buy a property for personal or household use, it must meet all residential requirements.  
So the end result is that HMLs won't lend if you ever intend to occupy.  And you likely will sign paperwork to that effect, perhaps repeatedly.