Hard money strategies I'm not accustomed to...
So the title of this thread is based on the fact that I'm a new investor and it's quite probable that these arent't new strategies. My fiancé and I met with a hard money lender this afternoon and two things came out of it that I have not been exposed to.
1. The lender is essentially guaranteeing a refinance before the rehab even begins. Based on our credit scores, income, cash, arv, etc. they'll be able to lock us in at an estimated 4.25 interest rate before we even get to the point of signing any contracts.
2. As it relates to funding the rehab process, I've only heard of getting these funds through draw requests throughout the rehab process. This lender, like others, rolls the rehab costs into the loan like everyone else does but makes you pay out of pocket for the repairs and then submit the invoice for it before getting paid back.
I guess my questions are 1, are either of these standard practice? 2, what is the risk/reward in doing either of these?
Bonus questions, what's everyone's opinion on using your own cash to fund as much of the purchase and rehab versus using hard money? Especially for a first time investment? In our short time learning about investing, you hear a lot about trying to fund deals with as little of your own money as possible but there's this thing called debt and we're kind of afraid of it.
Thank you!