Phoenix, AZ · Member since 2018 · 8 posts · 1 vote
Is it wise to use a hard money lender to fund buy and hold real estate investments ? or would it be better to use them to buy and-fix-sell ? and what is a good time period from buying to putting back on the market To minimize holding costs ?
Lender · Charlotte, NC · Member since 2011 · 57 posts · 39 votes
7y
There are private and hard money lenders that offer a rehab loan at hard money rates and then will refinance you into a long term 30 year rental loan at lower rates once stabilization of the property has been reached, i.e. rehab is complete and a tenant placed. We are a regional lender that offers this in our 10 state footprint but there are certainly other options as well. Just shop around to direct lenders and do your due diligence. Don't pay upfront fees and ask a lot of questions about process, funding times, and all the costs associated with the borrowing process.
Real Estate Agent · Albany, NY · Member since 2017 · 309 posts · 149 votes
7y
Generally if you are doing a buy and hold strategy and using leverage you are going for the lowest interest rate possible. Hard money is normally short term loans so that wouldn't quite work out. Hard money is used for flips or rehab and rent quite often (buy and fix-sell). If your talking about strictly minimizing holding costs, putting it back on the market as soon as possible is the answer. If your talking about maximizing your profit, there may be some strategy you use there depending on when your market will make your property sell for the most money.
Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
7y
Generally hard money is just too expensive to hold. If you can find private lenders who have some money and will lend it for around 7-10% interest with no points, that makes sense to use up front (and then later refinance with a bank). But hard money usually costs 12-15% interest with 3-5 points and other fees and just kills your margin and cash flow.
Real Estate Investor · Parkersburg WV, USA · Member since 2016 · 15 posts · 3 votes
7y
Actually I heard of a way that You CAN use it to fund the purchase outright then with money from the HML still left you would make his/hers payments with that money along with any expenses that arise, (None out of your own pocket) for the Flip period and once rented out for the first 30 days (if that) You could take it to a bank to refi and pay off the HML so you can get that lower interest over the HOLD period... Typically with a bank you would do an "Investor Special" aka HELOC to pay off the mortgage in 5-7 years maybe a little more, or a little less??? depends on the deal and the person
Lender · Charlotte, NC · Member since 2011 · 57 posts · 39 votes
7y
There are private and hard money lenders that offer a rehab loan at hard money rates and then will refinance you into a long term 30 year rental loan at lower rates once stabilization of the property has been reached, i.e. rehab is complete and a tenant placed. We are a regional lender that offers this in our 10 state footprint but there are certainly other options as well. Just shop around to direct lenders and do your due diligence. Don't pay upfront fees and ask a lot of questions about process, funding times, and all the costs associated with the borrowing process.
There are private and hard money lenders that offer a rehab loan at hard money rates and then will refinance you into a long term 30 year rental loan at lower rates once stabilization of the property has been reached, i.e. rehab is complete and a tenant placed. We are a regional lender that offers this in our 10 state footprint but there are certainly other options as well. Just shop around to direct lenders and do your due diligence. Don't pay upfront fees and ask a lot of questions about process, funding times, and all the costs associated with the borrowing process.