Hi all, I've received an offer for hard money (% to be discussed) but the lender has told me he likes all loans "turned around in two years." There's a lot to talk out still but I'm initially trying to determine if this would even be an option and absent a BRRR, I don't see it. For example:
Taking as an example and cash flowing $402 a month, even if I used all cash flow to only pay off DP loan of $71,400, I'd only get to $9,648 in two years. I'm thinking I must be viewing this wrong and what are other ways to pay back a DP loan in 24 months? I imagine a BRRR. Anything else?
Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes
5y
Hard money loans are meant to be short term. So, you would not expect to pay it off using only cash-flow. You either refinance like a BRRRR or you sell like a flip to pay it off.
If the property is already ready to go, then a BRRR is not a likely solution. I am going to guess you are unable to get traditional financing, which is why you are going the hard money route. There are several companies out there that will do loans for up to 5 years and even for 20 to 30 years, which could be a better fit for your circumstances.
Lender · Boca Raton, FL · Member since 2014 · 1k+ posts · 956 votes
5y
@Naomi Alzate, are you getting a loan for the downpayment from the hard money lender? If so, who is financing the rest of the loan? A traditional bank may not fund a deal with a capital structure like that.