Is it possible to close on a property with a hard money loan, then turn around and sell it on the MLS?
Would lenders lend if I had this exit strategy in mind?
Do they charge early payment penalties?
Thanks,
Ben
Possible? Yes, it's possible on a 1 off situation I suppose.
Is it a viable business strategy? No, it's not. This is a dog. Take it behind the barn & shoot it. Far better strategies out there then this one. Think about it. The property is exposed to the entire market & nobody but you buys it. How are you then able to resell it to the same people who already had the opportunity to buy it while at the same time covering your Hard Money Loan costs & putting a profit in your pocket? If they wanted it they would have already bought it.
I have explored the option of usin Hard Miney and from my discussion with this particular HML they don't have a minimum number of months but they did have a minimum amount of interest per deal. So even if you hold for a week you would have to pay the minimum interest per deal.
I dont see a benefit for hold for a particular time period as long as you get the interest.
There are short term bridge products available that fund within 7-14 days.
These loans don鈥檛 approve or deny based on your exit strategy- they are first position liens that require 10-30% down payment and satisfactory appraisal value馃憤馃徏馃憤馃徏
@Account Closed Yes it's absolutely possible. I recently did this, with an equity partner who put up 85% of the investment, all cash, and we split the profits 50/50. No monthly interest payments, so my cash flow was not affected.
We purchased a vacant lot in a great location off-market, split it up into 3 parcels, listed on MLS and are under contract to sell for around $200k more than our acquisition price. Buyer is a developer purchasing with all cash, so the banks were not around to interfere with the increased value.
This deal could be a perfect fit with my private money investors. Let's chat asap.
@Ryan Zomorodi Thank you. Sounds like a great deal you created! I was able to work out financing for this deal - Let's stay in touch for future transactions! :)