So basically I've been researching the topic of starting in real estate for about six months, that's how I found BP. I've read book after book, blog after blog. When it comes to starting out in real estate there are several options. Because I originally planned to work hard all of my life until I was sixty I placed all of my assets into a 401k. Not much in there currently, especially after it took a big hit during this previous stock market blunder.
So here is my question. I've researched enough to find Hard money lenders who only require a 10% dp versus the traditional 20% for conventional. Now the interest rates are obviously like day and night with conventional loans being much lower. So do I jump into the REI game with a hard money lender at 10% dp or wait and save the 20% dp for a conventional loan?
Research is the way we all started. Increase your knowledge as much as you can and later you'll be able to turn that knowledge into application.
Good question, but there are a lot of variables here. How much is the asking price of the property you have in mind? Will the additional 10% be difficult to acquire? My last deal I put 20% down to avoid the PMI and have a higher cash flow. I'm in escrow now for a property and also putting 20% down. The 20% down does help a lot and banks love it. But if the numbers work with the 10% down then that's all that matters. As long as the numbers work in your favor, it's a good deal.
Stay away from the HMLers until you get a better handle on what they do, who they are, and how to (most important how NOT to) use them. HML isn't a loan...it's an expense that can ruin a project if you are not on top of it time wise.
HML's are fantastic when you learn how to use them.
In continuing your research, you'll also want to explore private money lenders: people like you who have retirement accounts they need to recover after the crash.
Also, study up on self-directed retirement accounts.
Just some other options to explore...
If you are looking to diversify your retirement funds in investments other than equities, look into investing your retirement funds in real estate. A lot of individuals are not aware that a retirement account can also be invested in real estate. See the following link:
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