New York, NY · Member since 2010 · 18 posts · 0 votes
Hi Bigger Pockets community!! I recently found a great investment REO multi family unit building that is in relatively good condition (from the outside at least) and although it is an REO, there are tenants still in the building. I wanted to know if there was a way to obtain a long term hard money loan with no money down. Is this just a fantasy? Or does this really exist?
Hard money rates are double digits. Can you deal really sustain 15% interest payments?
Hard money is typically 6-24 months max.
What you might try to do is buy with hard money, fix, rent and refi. But you will still need all the usual credit, income, and reserves requirements. And realistically, even in this case you're going to need some of your own cash. Perhaps less than with conventional where you're looking at 20-30% down plus rehab costs out of pocket. But buying a rental with no money down? Only with owner financing. And that doesn't work for REOs.
Hard money rates are double digits. Can you deal really sustain 15% interest payments?
Hard money is typically 6-24 months max.
What you might try to do is buy with hard money, fix, rent and refi. But you will still need all the usual credit, income, and reserves requirements. And realistically, even in this case you're going to need some of your own cash. Perhaps less than with conventional where you're looking at 20-30% down plus rehab costs out of pocket. But buying a rental with no money down? Only with owner financing. And that doesn't work for REOs.
It seems that you may be far better off looking for a private investor that wants to make 6-8% on money they currently have sitting in a lame CD or IRA making squat.
Thank you Jon for your honest feedback. Based on the NOI, I would still be able to pay back the hard money at a 15% rate in 2 years as I already did the math, and still end up with a decent profit. Then after 2 years, I will be able to own the property free and clear! I am contacting hard money lenders now to see if there are any that are willing to accommodate me. I will keep you posted!!!
Hi Joseph. Thank you for the advice!! That is a fabulous idea!! Now the hard part is finding these private lenders. But I will do my research because I know this property will provide me with a very decent profit!!
Hi Again. If it is an REO, I cannot contact the management company for creative financing right? Because it is now owned by the bank. So I have another question. Should I contact the lender directly and negotiate? If so, how can I find the lenders information?
Just another thought...having all that equity sitting in one property may not be the best way to go. If you can get a decent rate on the money you borrow, you can put that cash-flow to work in acquiring more properties. In that same two years you could potentially own several more properties, all cash-flowing and building equity too. :)
Thanks again Joseph!! That is also a really good idea that I have been considering since there are a few in my area that would make good deals. I want to acquire a number of buildings so my equity would be disbursed through my portfolio of buildings within my two year time frame!!