Updated over 6 years ago on . Most recent reply
- Architect
- Westchester County, NY
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Hardmoney for Buy and hold?
Hello all, working on getting my first rental property. I feel as though I am decently versed in real estate and can analyze properties well. At this point I feel like I may be falling into analysis paralysis.. I’m getting stuck on making sure I have more than one financing/exit strategy. I’m looking in multi-family 3-4 units.. 5+ if it comes along.
After clearing up my personal finances, I will have enough for part of a down payment. My question is, IS GOING WITH A HARDMONEY LOAN AN OPTION IF YOU CAN PURCHASE BELOW RETAIL WITH SMALL REPAIRS NOT FOR A FLIP BUT FOR BUY AND HOLD? This seems unorthodox.
I ask this, for it to be an alternate to getting a partner or saving more to cover 100% of a downpayment.
Any other ideas?
- Jared W Smith
Most Popular Reply
I just bought a sfr a few days ago and have funded it and another in the following way: I get a contract on a property, and give to my portfolio lender (local bank). They order an ARV appraisal and create me a credit line for 80 % of this amount. This line will be on a 6 month term interest only. I purchase and rehab out of this until I finish or run out of their money. If so, I then use mine. Once house is complete, I get a year lease, appraiser comes back and validates the work. I pay off that line with a 30 year mortgage with same lender. That way, like Jay mentioned, the lender gets to eat long term. I don't ask rates, though I know they're fair. I set down with my lender 2 years ago and showed him my plan, and my goal of 100 doors in the next 20 years. He said you find them, we'll fund them. It works great for me. Good luck.
Clint