Private/Hard Money Lending

4 Replies

Quick question..

Can a investor use private/hard money loans to buy a house to live in?

Has anyone done it before?..

Hey Jameal, most hard money lenders will not work with you if your plan is to live in the property. By most, I mean that I've never run into a hard money lender interested in that situation. 

However, that doesn't mean it's impossible. For example, I bought & renovated a property with the initial plan to sell it immediately after renovation- your typical flip. I borrowed money on the deal from a hard money lender. After renovation, I decided that I wanted to live in the property. So I worked it out with the HML and ended up getting a refinance loan from my bank to cash out the HML lender 6 months down the road- I offered him 3 pts on the loan balance to work with me on it.

So... if you have an exit lined up for the HML, then they are typically all ears, you just have to sell them on your ability to execute.

Happy investing- Jake 

Most hard money lenders will not lend on owner-occupied residential properties due to the extra rules and regulations presented by Dodd-frank. Without getting into a complex explanation I will just list one and make it as simple as possible. if it's owner occupied The hml needs to prove that you can afford to Make the payments for the loan. If Hml needs to foreclose and this comes up in court mortgage can be forgiven meanings hml is out the money buyer keeps property free and clear. The same rules and regulations do no apply to investment properties which is why most only do investment property.  

You wouldn't want to borrow hard money to live in a property. 

Thank you all for the replies. I now understand why that wouldn't be a good idea. Just came across my mind and thought I'd ask. 

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