30K Loan One Year Term?

Question

So a college buddy knows we are investing in buy and hold properties. He has 30K he wants to invest with us. But he wants it back after 1 year. Since we don't do any flipping, can you see any way we can make a loan like that work? I would have no problem doing it over a 3 year period, but I'm scratching my head on this one. We have several properties we are looking at and would be using this money for down payments on likely 2 of them.

Thanks

Shawn S. · Answer

@Jerry W.

That was pretty much the conclusion I had come to, I just wanted to throw the thought out there to see if there was another way I was missing.  Perhaps if he would be willing to go 3 or 5 years this could be more doable.

Account Closed

I remember the days where I had credit card debt.  It was an art form to move it from card to card for 0 percent.  I'm amazed people that could do that often don't.  I have considered what you are suggesting, I'm just trying to find ways to get funds without having it affect any of the conventional loans I'm obtaining.

Account Closed · Answer

Shawn,

Sounds like you need to flip or wholesaling to raise more capital for your buy & hold rentals. At $30k loan, we can rotate them using 3% balance transfer with 0% interest for 12-18 months from credit cards to credit cards forever. I've successfully borrowed credit cards to buy 2 investment properties in San Jose while the money was tied up in other deals. It's doable. You just have to be a little creative. It's hard to give you sound suggestions when we don't know your financial situation and the cashflow on your potential buy and hold investments.

Account Closed · Answer

It would only work if he has equity that he can pull out after 6 months. Lenders are no longer do 100% financing on investment properties like the mid 2000's. :)

Jerry W. · Answer

@Shawn S. , I am having a problem seeing where 30k$ at 6% for 1 year can be useful if you are not doing flips.  If you use it for the 20% down to get bank financing you won't have the money to pay him back in a year.  I have done seller notes for 20% for the down payment, but I have a 5 year balloon and use a 15 year note.  At the end of 5 years I have enough equity to refinance at 80% and pay them off.  In one year there is no way you will generate enough income to pay him back.

Shawn S. · Answer

He's actually giving me an incredible rate of only 6 percent.  I'd just have to bank on being able to get another loan in that time as I could only likely thrown 10k back at him by that point assuming I don't buy any more properties in that time.

Dawn Anastasi · Answer

I should have asked what terms.  If it's 30k over one year with 20% interest, that would be a bad thing. But other terms could make it an excellent deal.

Dawn Anastasi · Answer

If you're using this money as a down payment only on a couple properties, then you'd have liens on them and therefore possibly could refinance, but it would be costly to do so as the lender would hit you up with fees.

Ramon Jenkins · Answer

Maybe refi within one year via a portfolio lender