Getting Properties through Private Lending

4 Replies

Hey,

So the deeper I am diving into this I am finding people using the tactic of negotiating with a private lender and getting them to pay for the property then eventually refinancing the property through a 30 yr conventional loan on it. Giving the private lender equity in the property or repaying them through the refinance. I know using leverage is a great way to get properties but I did not know it was possible to truly obtain with zero money down. So would going through private lenders to obtain properties to start off a good strategy? Or am I missing something? 

Local convention will tell you what is possible. Here in Texas, PMLs and HMLs will typically lend up to 70% of the ARV because their loans are based on the asset. Some will require the borrower to have some cash in the transaction to keep the borrower from walking.

You just need to talk to the lenders to find out their terms.

@Elijah Crew

100% financing is a tough one to find.  It does exist but it is usually when borrowing from an investor or family member who you know well or have done several deals with.  Getting started with zero down is even tougher.   As the others have pointed out, it is completely feasible to find 10-30% down programs, depending on the deal and your credit.  

You are correct about the refinancing too.  Many investors use hard money to get the deal and do the rehab, then either sell it for profit or refi into a lower rate 30year fixed to hold it for cash flow.

Choices, choices...

Cheers!

@Elijah Crew With a true private lender (friends family and associates that know and trust you), it is possible, but still rare, to do 100 % financing.

More realistically you put some money in at the beginning. And later refinance out so you get all your cash back and can do it again. Even this is not guaranteed. The numbers have to work. 
look for the term BRRRR here. There are lots of posts about it.