Private money question

Private money question

Dallas, TX · Member since 2017 · 2 posts · 0 votes
From what I'm seeing, Wholesalers typically will not work with a conventional loan structure due to the quick closing process, how fast deals go and most investors with 10+ doors have an LLC. I have private money access so here is my question. If I use private money to pay cash on a wholesale deal and I agree to pay 6-11% interest to the lender over 1 year, when I go to refinance through either a portfolio lender or small biz loan, will banks pay off a private money loan? I'm in the Dallas, TX area. There could be a lot of side discussions with this post (other funding alternatives, how to pay back a private lender and normal duration, LLC convo, etc.) I appreciate the input. The main driver is I work with a private lender who wants to be in and out of deals and not tied to the property for years. Thanks!
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  • Rental Property Investor · Austin, TX · Member since 2013 · 118 posts · 98 votes
    9y

    Hey Matt - using private money or hard money to buy a home, then refinancing with a bank loan is a very common process. The bank is going to underwrite the property, and depending on the institution will also underwrite you as a borrower. If they are happy with that, it doesn't really matter that you use the funds to pay-off the private lender. In fact, it will be required as the private lender will need to release their security over the property.

    If you're using another line of credit (e.g., business loan) to pay off the private lender, that's typically fine too, although you just want to double check the terms of the line of credit and be mindful of things like not using one LLC's line of credit to pay off another LLC's debt.

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