BRRRR- is there a reason to choose hard money first over bank?

[G. Doby]

I've noticed that investors tend to use a hard money loan for the first loan for their Brrrr and then get a bank loan?... Is there an advantage to this method?

I have a triplex I have owned for 2.5 years now. It needs major work but all units are rented and it cash flows. I invested about 200k in the purchase of this property, as California is insanely expensive. I want to Brrrr the property, as the ASV, is about 300-400k more than I purchased it for now, and rents would go up significantly. If I just refinance I can pulled the money invested, 80% as bank allows, but the prop still needs about 100k in work.

What is the benefit of going with a hard loan and then a regular lender?

[Nate Bell]

@G. Doby

In your case, since you've owned it for 2.5 years and have equity you could get a HELOC to do the rehab and then refinance. That would be cheaper than hard money. Hard money works best for properties that are in such poor condition that they can't be conventionally financed, or for a borrower who has no other source of funds. That doesn't seem to be the case here.