Private Money Lending for New Investor
Hi everyone,
I'm getting ready to buy my first investment property in Southeast Michigan sometime in the next 2-3 months (I hope). I have enough cash on hand for a 25% down payment and closing on my first property, but looking forward, I will be limited in how quickly I can save enough capital for my next down-payment. I've looked into HELOCs and borrowing against my 403b as other creative financing options for the future, but unfortunately this won't be possible. I was speaking with a mentor who told me he was able to use private money for down payments, almost as a line of credit when he was first starting out, and this seemed to work well for him. I've been networking and chatting with folks about this, but wondering if anyone out there in the BP world happens to know any private money lenders who might be willing to work with a newbie investor? Thanks!
Steve
Most Popular Reply
Never borrower for the down payment. This is the equivalent to 100% financing and if you have little to no experience as well as no capital in case you get in trouble you could end up bankrupt and set you back 5-10 years. I never recommend anyone go down this path, save the money to have donw payment and reserves before buying real estate.
There is a reason why FHA mortgage default rate is so much higher than conventional. Higher LTV = Higher default rate.
- Chris Seveney
