Class C: Personal loan for 200k, should I use it for multiple down payments, or...?

[Zach Howard]

First of all, feel free to make any and all comments you wish; there's no need to sugarcoat anything. I appreciate almost any feedback where the poster makes a sincere attempt to share their opinion, regardless of what it might be. Thanks.

I really like the idea of using OPM to invest. Here is my current situation - I can probably secure a personal loan for about 200k at around a 3-4% interest rate with a 5-year tenor. Repaying this shouldn't be a problem assuming I don't suddenly lose my job.

I am thinking about starting off in some class C neighborhoods and will be handling everything remotely. Perhaps I'll try to acquire around 3 properties in cash deals that need fixing up, rent them out, and then hold onto them... forever? Based on my previous investing history (completely unrelated to real estate), I would describe myself as a buy-and-hold kind of guy. Hopefully, things will go relatively smoothly with the rehab, vetting tenants, and so on. If the rent stabilizes, I can then consider refinancing these properties using DSCR or other valid options (please educate me, and let me know what other options you think are valid). What are your thoughts on this plan?

Alternatively, do you think it might be better to use the 200k to make down payments on higher-quality homes, i.e., ones that are almost rent-ready, and finance the remainder of those purchases with DSCR, etc.?

I'm entirely new to real estate investing, but I have a high risk appetite because I have seen other people achieve amazing things that many say cannot be done. I often look at them and think if they can do it, probably I can have some level of success too.

Other key info I may have left out above:
1) I am not in the US, and have no plans to visit or move there
2) I am not a US citizen, but possibly have a credit history there (maybe none) since I attended university there many many years ago
3) I am completely new to real estate - I've been reading crazily and consuming lots of content. Next step will be to start analyzing deals for practice and asking others for feedback on my analysis. Once I've done that multiple times and I'm getting positive feedback on my numbers it will be time to begin the real journey. 

Thoughts please. Thanks again. 

[Jay Hinrichs]

Quote from @Nicholas L.:

@Zach Howard

when you say a 'personal loan' at that interest rate - that must be a friends and family thing, right?  no one is commercially loaning at that interest rate right now.  and even for friends and family, that's more of a favor than a loan...

you asked not to sugarcoat, so here goes.  what you're proposing, while possible, is incredibly difficult and highly risky, and i don't know how you would do it completely remotely with no plans to visit or set up a team.

i think i've said this in other posts, but there is tremendous demand for inventory right now among both retail buyers and investors. to BRRRR something, you need a goldilocks property - something distressed enough that it can be bought substantially below market, but not so distressed that it can't be repaired. everyone wants those deals, and so you're competing remotely / from your computer against experienced investors in person in any market you'd pick.  on the chance that something comes to you somehow - you'd have to snap it up / put it under contract immediately, and again, that's very difficult to do remotely.  as an example, you'd have to do something different than this:

https://www.biggerpockets.com/forums/963/topics/1195280-expe...

https://www.biggerpockets.com/forums/48/topics/1137397-balti...

https://www.biggerpockets.com/forums/48/topics/1137397-balti...

i am trying to do the same thing locally, in person, and it's difficult.  everything on and off market gets multiple offers almost immediately.  and if it's sitting, and you see it, it means everyone else passed on it.  what does that tell you?

on your second question - you're proposing 100% financing.  you'll be cash flow negative / losing money, potentially for years and years.  it's your money, so if you find something in a market you believe in and want to try to hold it very long term, OK - but again, it will be many years before you recoup all the interest you'd be paying.  i don't think that makes any sense - there are investments that make money - but YMMV.

hope this helps

Your talking financial suicide.. Class C from half way around the world fully levered.. U will go broke that I can basically assure you or at least 90% chance this will not work and you will lose money.

U would be better off making loans with that 3% 4% money at 10 to 12% and make the interest rate delta pick very good borrowers and let them take the risk on the assets.. Thats what i would do.. BE the BANK..