Traditional Financing or Private Money

[Monique Moliere Piper]

My husband and I are looking to buy mostly single family houses to rehab and rent. We are not averse to multi-family. They are just not that many small 1-4 unit properties in our area (Baton Rouge, La). Our goal is to acquire a few single families a year.

Here's the dilemma, should we do traditional financing? We have down payment money, but not for multiple houses in a one year time period. What are some strategies to achieving this goal? Thanks!

[Darren Eady]

@Monique Moliere Piper

It is almost always best to use conventional financing in real estate, if you can.  

You use hard money when you are lacking one of three things: 1. Credit 2. Income or 3. Time. If you can't show your income (for whatever reason) you cannot qualify at a bank. If your credit score is not up to par, you can't qualify at a bank. If you don't have the time to wait for a bank to process your loan and you'll miss your deal if you don't close quickly, a bank loan won't work. If you CAN get a bank loan, you should. If you are lacking any one of these three items, a bank won't work for you and you should use private money or hard money to get your deal.