Using Hard Money and Partner Question
BP,
I'm currently working with a partner on a deal. We made a conventional financing offer on this property, but the Seller and/or their agent came back and said they will only take cash. Long story short, they just a quick sale.
I brought up the idea to my partner to use let use this HM loan as a bridge until we get a conventional loan. He liked the idea, but fear that we may default on the loan. I agreed that this is a realistic probability, but nothing to be fearful about. And very unlikely.
I suggested that because the HM I'd at 11%, 2.5 pt, interest only, 1 year term is approximately equivalent to a 4.75% fixed for 30 years. And this is pretty true for the first few years for conventional financing because interest payments are higher initially than the principal payment.
The partner is still a bit edgy about it. Any suggestions on calming his nerves?
- I went over Plan B, Plan C, etc. And still a no go.
Tony