Real Estate Investor · Grand Prairie, TX · Member since 2016 · 11 posts · 2 votes
I am about to buy my first property to flip and have been looking at a traditional mortgage or hard money as my source of financing. Honestly, I'm not sure which route to take. So my question for the pro's, which do you prefer Traditional, HM, or other? Any insight would be greatly appreciated.
Conventional is by far the cheapest but you will have to find a seller willing to wait 30-60 days to close. This is standard practice for retail owner-occupied homes but for investors it is more typical to close with cash or hard money because it is quick and certain.
A hybrid approach is to close in cash and then do a cash-out refinancing with a conventional loan under Fannie Mae's Delayed Financing Exception.
Conventional is by far the cheapest but you will have to find a seller willing to wait 30-60 days to close. This is standard practice for retail owner-occupied homes but for investors it is more typical to close with cash or hard money because it is quick and certain.
A hybrid approach is to close in cash and then do a cash-out refinancing with a conventional loan under Fannie Mae's Delayed Financing Exception.
@Casey Gray if you can get a conventional loan despite the property's condition then the only advantage you have is that it will cost you much less, but that's at a price of it taking a long time to close, being a pain in the derriere, and possibly costing you the deal because cash is king. On the other hand Hard money is almost as good as cash, though really expensive, so you have to make sure you account for it in your deal economics and that you get out as fast as possible.