If you borrow for down payment how do you pay it back?

Question

Hi everyone, I have super newbie questions! If you're borrowing private money for a down payment, what's the best way to pay them back? Do you add it on as an extra monthly cost or is there a better way?

Ned Carey · Answer

@Valerie S. who is loaning you the money and what are their terms for repayment. If someone is giving you a short term loan then you need to find a way to pay it back in the short term. That might be refinancing after a modest period. But you have to know there is enough value ther in order to refinance. On most deals that wont work.

If the payments are over a longer term, it just is another expense that you pay out of the income the property generates. You have to know that the property generates enough oney to cover that extra expense.

Erik Estrada · Answer

Depending on the ARV, and rental income, you could possibly cash out refinance to payoff your 1st note and your second note (private loan), But it is extremely hard to pull off in this market.

I have been seeing a lot of newer investors over leveraged and have to come out of pocket on the refinance or sell the property to breakeven

Dave Skow · Answer

@Valerie S.- borrowed funds  are  defiitely another expense ....if you are  gettting a loan for the new property - check  with them to  validate that a  down pmt  is allowed to be a loan  ( in most  cases - it isnt ) - good luck

Wyatt Wolff · Answer

Add it on as an extra cost. Understand that the property needs to float the payment, or you do. Maximize income, second job, raise, roommates, the methods vary.

Good luck!

If you borrow for down payment how do you pay it back?

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