Am I trying to borrow too much?
If I get a 50k loan from a private money lender to purchase a property and then a friend loans me 5k for the down payment to the private money lender is that doing too much borrowing?? If not, what is a good interest rate to put on the 5k loan from my friend and how could we work this out, when would be the best time to tell her I can start making payments? How do you experienced buy and hold investors do this for a residential property?
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Too much borrowing depends on what you can afford. I'm trying to borrow close to $400,000 on a deal because I believe the numbers will work and the risk is at a tolerable level. What's your net operating income and will it cover the payments on the debt plus? What happens if a unit is vacant for 6 months or a year. Will you be able to make the loan payments or might you risk default? Or even if you don't default, will you be able to afford to maintain your current lifestyle? All food for thought. I don't think it's about amounts at all. It's percentages and risk factors.
As far as rates, I'm not sure you can expect to pay 3.5% on an investment property. That's more like for a primary residence mortgage. Also, private money charges a premium because the lender may be taking on more risk than a bank would. I suspect even 5% would be a really good deal on private money!
Good luck!