Hard Money Needed?

Question

My brother and I started a LLC 2.5 yrs ago with the goal of purchasing rental properties with excellent cash flow.  We have accumulated 19 properties.  Our plan was to purchase cheap (with cash), rehab, and then rent and refi.  Traditional lending is wearing me OUT!!  I would like to borrow hard money at a higher rate and start getting back on track.  Our properties are around 30K (50K after rehab) and rent for $450 to $500. Our goal is 200 properties. We are both 700 scores and self-employed. What to do?

Ben Carmona · Answer

Agree with Jon and John.

Sounds like you need long term financing for rentals.

Hard money or WLOC great for acquisition and short term holds.

Once you pass having 10 properties the number of conventional lenders reduces significantly.  It's stil possible to get wholesale residential loans though.

This is why a blanket loan was suggested, because commercial lenders will do the loan in your business name.  Not just a blanket loan for commerical may be available but also individual commercial loans can be made.  Either through local banks where the properties are located or by a few national lenders.

Jon Holdman · Answer

Hi catbacker and welcome to BP.  You should post an intro in the new member's forum area.

You might want to investigate commercial blanket loans that would cover a set of properties.  You don't want hard money for long term holds.  Hard money would be useful for the initial part where you buy and rehab, but you would still want to get into something more conventional for the long term.

Might want to do some reading here.  We have a number of long term landlords, and what's a good deal and what's not is a frequent and sometimes heated topic.

Jon

Account Closed · Answer

Hard money is a tool. Like any tool it works best when used correctly.

It is not a long term financing solution. What you appear to need is a blanket facility that will let you finance long term after the property is fixed up. A Working Line Of Credit (WLOC) for the short term when you are buying to fix up and sell or fix up and put on the long term facility is the complementary piece. A WLOC can be used or hard money though the WLOC is less expensive in almost all cases.

John Corey