Up front fees (outside of appraisal fees) are typically a red flag when dealing with a HML.

Quote from @Amy Smith: Be careful you don't get in too deep.

I don’t see anything glaringly wrong with their concept but 2 things have caused a red light.  1.

If you only have a homeowners policy, and something happens like a fire or a guest gets injured, and the insurance company finds out you're renting out the house, you're in deep trouble. 

Since then, I've documented the process as a Boutique Hotel investor and have a deep commitment to sharing my knowledge around Boutique Hotel Investing with others who are looking for a path to financial freedom, and Boutique Hotels is the best path to get there in my personal opinion.

FD came and red tagged the outlet.

Here is some key information:Property recently hit the market and has 2 cash offers alreadyThe seller provided a pre-inspection report, which I shared with 2 different lenders, both think it may fail conventional financing due to potential structural and electrical issues (realtor thinks it could pass conventional)Seller has 100% equity but is behind on other payments (not sure of the urgency money is needed)This is my first attempt at an “investment” property so I’m new to thisI see 3 optionsMove forward with an offer using conventional loan pre-qualification-Not as attractive of an offer to the seller-Possibility that appraiser calls out structural/electrical issues that need to be fixed before closing, effectively causing financing to fail- Best terms and fewest loan fees for meUse a rehab style loan such as ChoiceRenovation-Even less attractive than a conventional offer to seller, but less risk of failed financing if appraiser calls out issues-Slightly worse fees and interest rates compared to conventional-Lenders tell me possibly up to 60-90 days closing in some cases, with red-tape for contractor requirements and draw schedules (sounds like the most hoops to jump through during rehab)Use a hard money lender-Most attractive loan option I can give to seller so I can compete-Much higher fees and interest rate for me-need to refinance into a conventional at the end of rehab (not familiar with seasoning periods but I think this is a factor as well)Which option would you do?

I also  am not sure her getting her real estate license and sell a property a year as someone suggested will qualify for the 750 hours.I know we all want to make money, but we do not want to raise red flags....  

If you’re able to dive deep or work with someone who has boots-on-the-ground experience, the returns can be very rewarding.Good luck with your journey, and feel free to reach out if you’d like more insights or resources on Detroit!

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