A Weird Question
Hey BP! I have a question for you guys. If you had a loan from a private lender for $300,000, but the lender wanted monthly payments of $1,750 for the next 30 years at which point the loan would be paid off in full, how would you spend the money?
This probably sounds like an unusual situation… but it’s one that I find myself in and now I’m unsure of what the best way to spend the money would be.
I know the answer completely depends on my goals, but if YOU were in this position what would YOU do?
Would you just buy one or two properties cash? Or would you divide the 300k into a bunch of down payments on multiple properties? Or what other ideas do you have?
Thanks a bunch!
Let's start here:
You buy opportunities.
Any idiot can go on a buying spree and lose every dime of his investment in short order. It's not a numbers game - but a cash flow play/appreciation play/tax deduction play.
My recommendation to you is to do nothing but LEARN. Your thought process as it relates to investing and return is not quite where it needs to be - and most of us who are serial investors aren't concerned about paying off a property in 30 years.
Know what you need to know before launching.
@Patricia Steiner Thank you for your reply. I agree with what you said about buying opportunities, and I guess my question was more directed towards HOW I should buy those opportunities. I’ve been in the game for a couple years now and have a dozen or so rentals, but I have always used a more conventional approach to buying them.
So my question is more how would you use this opportunity I have with this private loan. Would you pay in full for properties? Would you use the money as down payments? Would you use it as temporary funding for BRRRR's before you refinance? Etc.
#3 1031 Exchanges Contributor
- Investor
- Las Vegas, NV
Unless you have terrible credit, no DP money or no income. You run away from a person who wants to lock in you at almost a 6% interest rate.
Assuming you do have bad credit and/or no DP money there’s probably very little downside. Worst case you declare bankruptcy and walk away with a clean slate
Get detailed contract with what happens when one of you dies (at least possible if not ikely for 2 people over 30 years), what the penalties are for late payments, if/how the loan can be called due. Make sure you receive an annual 1098 for mortgage interest paid so you can deduct the expense from your taxes.
Good luck.