Hard money for equity?

[Arjan Manwani]

Greetings all, so I'm a beginner investor in a precarious situation, and would love hear your feedback on my situation.

So under contract, is a great deal that fits perfectly my criteria, 20% down on one lot with two houses, both cash flowing beautifully. Since I do not have the cash, the 20% down toward one bank is coming from a HELOC from another of my rental properties through a second bank with whom I've done business for over fifteen years.

Problem: Second bank is taking substantially longer to close on this HELOC and I am afraid seller will not want to extend purchase contract time.

Question: What does a contract look like, which says hard/private money is given in order to make the sale go through (without negatively affecting my DTI) and also says that repayment will come from a lump sum HELOC cash from that second bank? Thank you!

Arjan Manwani, Louisville KY

[Jay Hinrichs]

Originally posted by @Arjan Manwani:

Greetings all, so I'm a beginner investor in a precarious situation, and would love hear your feedback on my situation.

So under contract, is a great deal that fits perfectly my criteria, 20% down on one lot with two houses, both cash flowing beautifully. Since I do not have the cash, the 20% down toward one bank is coming from a HELOC from another of my rental properties through a second bank with whom I've done business for over fifteen years.

Problem: Second bank is taking substantially longer to close on this HELOC and I am afraid seller will not want to extend purchase contract time.

Question: What does a contract look like, which says hard/private money is given in order to make the sale go through (without negatively affecting my DTI) and also says that repayment will come from a lump sum HELOC cash from that second bank? Thank you!

Arjan Manwani, Louisville KY

this is not a situation for HML as they will want 10 to 20% cash to loan.. so that does not help plus your fee's to do it will be when all said and done 3 to 5% on top of what your borrowing.. Now if its a smokin deal and the 3 to 5% is easily absorbed then its worth it but you still need cash down .. or you need a friends and family's to help you out.

leveraging up 100%  to buy rentals you want to be careful there if you don't have a bunch of cash reserves since your tying up your heloc for the purchase  leverage to the eyeballs can be great if everything plays out perfect  if not it can be highly stressful.