Lender · Los Angeles, CA · Member since 2017 · 916 posts · 647 votes
Hello BP community,
I have observed a lot of confusion on the forums about financing options and the availability of programs for RE investors. As I have gained a ton of knowledge from the forums in my own journey, I would love to give back and answer any questions you have about the financing world. If I don't know the answer, I'm sure the community can step up and help as I am by no means the end all, be all of info.
I’m very new to all this and am in the “educate thyself” phase. I currently own two properties.
I appreciate your offer of information!
What I *think* I understand:
- there are MANY ways to finance deals.
- small banks/etc can be more flexible in terms
- there is a limit (10?) to the number of bank mortgages a person can have.
What I’m confused about:
So much of what I read/listen to is experienced investors (with way more than 10 properties) talking about buying properties with a variety of creative financing strategies) and then “Refinancing” the property into a “traditional” mortgage later on.
So- what kinds of refi’s are these? Don’t they count against the 10(?) loans you can have?
What am I missing? This is never explained in the podcasts or books...
I’m not sure if this is the right place to ask this financing question however I am wondering what happens if a valuation falls short in a hard money deal.
Example:
I am interested in purchasing a property for $489,000.
Repairs- $47,000
Total Cost- $536,000
Down Payment- $75,000
Loan amount- $455,000
ARV- ~$650,000
My plan is to purchase the property, repair, then refinance at a conventional interest rate and rent. My question is, what happens if the valuation does not come back for the full $650,000 amount?
I will be using a conventional lender on the refi and just need to make sure it will cover the $455,000 loan, I don’t care too much about pulling any cash out, simply need to drop my interest rate for 10.75% to around a 3% interest rate.