Hard Money To Buy Short Sale/Pre-Foreclosure
Hi everyone,
I'm very new to the world of investment properties and have yet to even do a deal but after listening to Bigger pockets first 20 podcasts I had a question about short sale/pre-foreclosure deals. I'll try to work through the deal as much as possible with my limited knowledge.
Here's the example:
(Assume I've found a private investor or hard money to finance 100% of this deal.)
I find a short sale/pre-foreclosure where the current owner owes the bank 75k and the home appraises for 100k as is. I offer the bank 60k and they accept. I take ownership and put in say 10k worth of repair work, which is also part of the private investor or hard money loan, (now at 70k). I get an appraisal and it comes back now worth 120-130k. Could I wait a year of seasoning while renting out the home, refinance to a conventional loan with a much lower APR and pay off the investors without paying that investor or hard money loan for that entire year out of pocket? It's kind of a 2 part question because I'm not sure on the loan structure of a hard money lender, if they expect monthly payments or if they expect the payment in a lump sum at the end of the time frame. Just trying to get a good grasp on the options for creative financing.
Thank you,
Mike