Okay so I have practice analyzed and practiced the movements to buying real estate. I plan on using private money or hard money,
1.how does the process go when contacting a lender from beginning to end (real examples)?
2.what are the pros and cons of both?
3.what do you do once you obtain a piece of real estate and your not able to refund the lender with they’re initial investment plus the interest?
4.How long do you have before you have to pay them back?
I like private money better because it's cheaper and more flexible.
The downside is that you have to do some serious relationship building. If you don't have a person who trusts you and is willing to lend - or if you just need more money NOW - then a hard money lender might be the way to go.
If you want to raise private capital, read Matt Faircloth's book for a comprehensive overview.
The term of the loan is completely optional. Different lenders have different preferences, so it's whatever you work out with them.
If you're not able to pay them back on time, you can sell the property, ask the lender for a loan extension, or otherwise re-negotiate. In my case, if I can't pay my lenders back as originally planned, I can usually pay off the small part of the loan that's left over with the cashflow from that rental property. Obviously this wouldn't work if you're not doing rentals.
@Clark Kirkpatrick thank you for the reply, that makes more since! I have some good resources for private lenders, and I can always pull a heloc on my primary residence to go in and rehab so it’s not just the lenders money at stake. I’ll definitely look into reading that book as well!