When borrowing money to help fund a deal what are the best strategies for paying lender back? Using cash flow from property? Refinancing after a few years? Any advice is greatly appreciated. Thanks
To me, it depends on your personal goals. Many of us like to use debt, since money is so cheap right now, to finance deals. Ask the lenders you use how many properties they will finance and keep looking for others who will do more for you.
For example if I need to put $100K down on a property and I bring $50K and I get a private money lender for the other $50k what strategy should I use to pay the $50k back to lender?
It depends on the terms of the loan from the private money lender. Will they allow the loan to be out there for a longer term period? Every private lender is different.
If you work with them enough, they may give you more favorable terms. As you use and pay off the notes.
Private/HML can have prepayment penalties... so that'd dictate how I'd go about repaying it.
@Paul Thompson If you can bring $50k into the deal for a $100k property, I'd recommend just going to a bank and getting a 15 year fixed for around 4%. Then use the cash flow from the rental (assuming that's your goal) to pay it off.
I've done shorter term deals with private investors or owner finance, but the terms are generally shorter. So you always have to worry about selling or refinancing and hope the market isn't tanking (i.e. 2008). Less stressful that way, in my opinion.
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