Buying Multi Unit to Hold with Hard Money?

5 Replies

has anybody done it ? 

I see a Norris Group buy and hold product that I am interested in.

any thoughts ?

Never seen it done, but I feel buying and holding with hard money will get very expensive, very fast and extremely hard to make something cash flow. It seems like it would make more sense to get a money partner and take a percentage of a deal that cash flows rather than all of a deal that loses money.

@Phillip Syrios

Thanks for replying. The goal is not to lose money.

I see a hard money loan that converts to 9% after a while ( 5 year term ). Its not a good interest rate, but it may be a way into a multi unit with nothing out of pocket. 

I wonder if you cash cash flow with a 9% loan ? Then refinance to a conventional loan later ?

It may be crazy, but Im trying to get creative and make something happen.

I would recommend against it. You are too dependent on getting the refi, and it can be very difficult and time consuming to refinance multi family properties. Been there, done that and wouldn't do it again.

Originally posted by @Tom La Rosa:

@Phillip Syrios

Thanks for replying. The goal is not to lose money.

I see a hard money loan that converts to 9% after a while ( 5 year term ). Its not a good interest rate, but it may be a way into a multi unit with nothing out of pocket. 

I wonder if you cash cash flow with a 9% loan ? Then refinance to a conventional loan later ?

It may be crazy, but Im trying to get creative and make something happen.

That's not too crazy, you can make stuff cash flow at 9%. We actually use the exact same business model in the Kansas City market. We look to get 9% interest  only money to 100% finance the deal and repairs and then have a decent  cash flow. Then we refinance it at a lower interest rate with traditional financing and pull out all the investors money.

The three keys to this model working is to have a high rent to cost ratio, have great Managment and get into the deals cheap enough that you can refinance your investor out with a 70% LTV loan a year or two down the road.

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