Using private seconds to pay for rehab.

[Joe S.]

How many people have used private money seconds on the rehabs and then refinanced the private money second and first out? My thoughts were if I brought in some private money to front the rehab then I could work on more projects at one time. I have a number of BRRRR projects going right now, but I am tying up down payment as well as the rehab out-of-pocket. A number of them I am Getting all or most of my original investment back, But I can only do so many at one time at the rate I'm going.

[Joe S.]

Originally posted by @Account Closed:

Originally posted by @Joe S.:

How many people have used private money seconds on the rehabs and then refinanced the private money second and first out? My thoughts were if I brought in some private money to front the rehab then I could work on more projects at one time. I have a number of BRRRR projects going right now, but I am tying up down payment as well as the rehab out-of-pocket. A number of them I am Getting all or most of my original investment back, But I can only do so many at one time at the rate I'm going.

That does work. 

The consideration of course is to be able to sell or refinance fast enough to pay people back by the end of the term of the loan. I see some investors are over leveraging the private lender's loan in 2nd position and if the market drops or doesn't go up at the same rate as it has been, or if the property takes too long to sell, the 2nd lender is at a risk they are not prepared to be in and didn't sign up for. What I mean is, for that kind of financing, it is only right to make sure you can liquidate quickly enough to make whole the investor in 2nd position. MAtt18-29

Agreed.