New Orleans, LA · Member since 2015 · 49 posts · 11 votes
hello fellow Real Estate Investors,
I am currently working on a deal for 3 duplexes & wanted to go the hard money route. Is it possible to get a hard money lender to acquire the properties then refi (there is a good bit of equity in these properties) and also what are some things I should take caution to & other traps to avoid?
Thank you in advance, All insight and knowledge is greatly appreciated!
Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
11y
Is it possible? Yes if the property fits their criteria and LTV requirements.
It's also the most expensive, time-sensitive money you can borrow. Definitely check with your lender you plan on refinancing through about time and price seasoning requirements.
If you get in there, improve the property and go 1 day over the expiration date of the hard money payoff, you will lose it @Isaac Antoine!
Rental Property Investor · Phoenix/Lima, Arizona/OH · Member since 2012 · 4k+ posts · 4k+ votes
11y
Is it possible in concept - yes. But, the entire premise here is that you will be able to refi as planned and scheduled, which means that the permanent financing player is fully involved from the get-go...
And it doesn't stop there, because some times banks change their mind last minute - ask me how I know this :)
Not to mention that your costs with HML will be very high, and terms will be quite rigid.
Investor · Tampa, FL · Member since 2011 · 2k+ posts · 3k+ votes
11y
See if the hard money lender will do a 2 year balloon. As long as the rentals are seasoned for a year or more, you should be fine for a refi.
You'll be paying a high interest rate with the hard money, what out for junk fees. There's going to be some fees, but don't get buried.
Worst case scenario, you could always refi with another hard money lender, or re up for another term with the one you use, they'll probably charge you fees again.