Creative financing: am I even thinking outside the box?

8 Replies

I’m brand spanning new to BP and the whole real estate investment world. As such, in an effort to satisfy my own curiosity, is it ridiculous for me to consider cross-collateralizing two vehicles to secure a loan and get started with a house-hackable duplex or other small investment property? If that’s doable, what happens after 1-2 years and I refinance? Are those vehicles still held as collateral if for some crazy reason we default on the loan? Finally, since I’m showing my hand and admitting that I really have no idea if this is even a reasonable option, please feel free to set me straight. I’m currently a sponge and willing to soak up any tips, advice, thoughts, etc. that will help get the ball rolling. Cheers!

@Eric Adobo they aren’t super expensive or overly extravagant cars. I’d say that with both of them, I’d be around $25,000. I imagine it wouldn’t do much for me, especially trying to secure a mortgage. I’m just trying to explore as many options as I can. 

You can do that but it is pretty risky. It could start a snowball effect that you may not be able to get out from under. Vehicles are much easier to foreclose and reposes than a house so they will take them first. Then you don't have a way to get anywhere, do any repairs, go to a regular job. Plus now your credit is in the crapper and you can't get another vehicle. My dad was a banker and growing up I remember going to school in lots of different vehicles because it was his job to drive the repossessions every couple weeks to keep them in good order. There were always a couple cars with for sale signs in the bank parking lot.

But no, if you refinance it would erase the debt of the first loan including any collateral unless you refinanced at the same bank and they required you keep the vehicles as collateral. In which case find another lender.  

@Peter M. thanks for the info! Super helpful thoughts from someone who’s been (kind of) on the inside. Maybe we’ll consider that as a last ditch effort, but even then, I’m not sure. It is nice to be able to get around. 😀
Originally posted by @Eric Adobo :

Serious man. It's about as nonsensical a way to get in the R E game as there is. 

 For sure. I’m not interested in skirting the system, or looking for “easy ways to be a millionaire,” I’m just new to investing, asking as many questions and gathering as much information as I can. Since I’m on the front end, I'm working to explore as many different routes as I can, taking advice along the way, in the hopes of avoiding any major catastrophies.