Updated over 6 years ago on . Most recent reply
First deal- buying a foreclosure with hard money a good idea?
Hey all!
I'm a new member in Northwest Chicago looking to make my first investment. My partner and I found a three-flat property on the MLS located within the northwest side of Chicago that happens to be a foreclosure/cash only deal. The property is currently vacant and will likely need 3 updated bathrooms, refinished floors, new paint and new siding for the garage, however we haven't toured the property yet... I'm roughly estimating the cost to repair after purchase will be around $10,000.
Because this is a cash only deal, we will likely need to look into hard money lenders in our area that will cover the entire building cost as well as the repairs. However, based on my estimations, the cash on cash return will likely be around 14% and because it is currently bank owned, we will likely be able to get it for $50,000 less than it is valued for.
For those of you who have been in the game for a while- do you think this is a good idea for our first deal? I admittedly do not know a lot about hard money lenders yet, but I've been hearing a lot lately from my broker friends that they are pretty risky and have enormous interest rates.
Any advice is appreciated!
Mike