Hey, guys, I wanted to get some input on investing in multifamily properties with hard money loans. Is it practical? I want to start, but I'm wondering what the cons would be moving forward in that arena. Anyone with experience that has done it before? Another option I've heard of is a being part of a syndication but I've run into the issue of having to be an accredited investor which at the moment I am working towards. My market is Austin, TX.
Will this be your 1st investment property or do you have experience single-family prior to this? From my experience, I have seen that investors typically start off with SFR before jumping into a multi-family project. If you have your numbers lined up, investing in Multifamily should not be an issue with any hard-money lender.
If you are looking for recommendations for hard money lenders in the Austin Area or just need some advice moving forward, I'd be more than happy to help out!
I have multis and my market is Las Vegas. Not major difference from Austin, as both markets are hot. The major issue with hard money is the high interest payment. I don't think on HML there is principal and interest. If you are paying 10%, that's pretty high compared to conventional 30 year fix at 5.25%. The expenses will still be same. As long as the property value go up, and you can maintain positive cashflow, you are okay.
Overall, higher risk, and you will need an exit strategy when market values go south.
@Matthew Deskins Thanks, and yes I have done some SFH investing in the past.
You can use HML to acquire multis, and then refi. HMLs are now offering buy/hold specific loans.
When you say multifamily, how many units are you talking about? There's a big difference in terms between a 2-4 unit and 5+ (and sometimes 20+). Also, once you get to 5+, most lenders won't lend to you unless you either have experience or partner with someone that does.
@Fernando S. We have done it only when needed and less than a few months. Many time you need 50-100k for hard money to be considered for a MFH.
@Nghi Le I'm looking to start small maybe a duplex/fourplex for now. But thanks, ill look for a few lenders in my area.
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