I read Bob Barney’s article on this topic at: http://www.reiclub.com/articles/hml-vs-conventional but still don’t completely understand. Based on his article, the cost difference between a HML and convention is minimal. How can this be true?
I am looking for my first rehab project. I will need a no-doc/low-doc loan under the name of my LLC. I have $30,000 cash on hand available for this project. I was thinking of a property with ARV of around $200k with purchase price of 75%*ARV – repair costs. I don’t have the time or resources to look for a seller with flexible terms. I’m talking about a cash purchase and rehab. What is the best way to approach this? HML or conventional?
My thought: If I can qualify for a conventional loan, isn’t it always better and cheaper than a HML because of the lower interest & points?
depends on what your exit strategy is, that’s how i determine what kind of financing. what do you plan to do with it in the end. Long-term hml’s will kill you. short term conventionals will hold you hostage. think about what you want to do-- quick turn or accumulation. what is your time frame for rehab, exit whatever. the right type of loan is all time value of money.
I plan to do a cash purchase, rehab, and cash resale in 6 months or less.
I was thinking of using a: Conventional 1 year fixed ARM, interest only. If I can qualify, that will definitely be more cost saving than using a HML right?