Buy and Hold Financing Question

[Tia M.]

I am currently looking to purchase my first two rental properties. Ideally I would like to purchase one single family and one multifamily. My question for this post is about the financing of those properties. From everything I've read, hard money would be the way to go to purchase these properties for my situation. However I'm looking for a loan that I could have for a few years before converting to a conventional loan. Most hard money terms I've seen are a year or less. Is it possible to get a hard money loan for a longer term? If so, would that be best way to finance this type of deal? I welcome all comments and suggestions. Thank you in advance for all your help.

[David Beard]

Tia, I don't think you stated why you need 2-3 years prior to bank refinancing. Do you expect it to take that long to get your credit or income profile where it needs to be? Are you thinking about the common bank requirement for two years of landlord history prior to using rent income in qualifying ratios.

Many HMLs that do fix-and-refi loans want to see that you have a bank pre-approval prior to lending.

In a few areas of the country, 2-3 year hard money loans are pretty common; most places it's unheard of. By FAR your best bet is a private lender at 10%. Finding someone at the REIA is a good idea, if you don't have anyone in your circle of influence. A little tough right now, as many investors have been killing it in the stock market for the last 4 years.