Hard money lines of credit dangerous?

Question

I've been calling small banks here in Arizona and a few of then say that they need collateral for the line of credit. Specifically my home. Is this normal? Also my lender who I usually use, advised against doing this because he said many new investors get over there head and can't get out. My husband and I wanted to do the BRRRR method but he was suggesting instead of using hard money or a line of credit to just purchase it traditionally will equity from our home (which would not be enough for rehab and a down payment).

Any advice would be greatly appreciated. This is going to be my first deal and I want to make sure all my ducks are in a row.

I have a 1 year old son and we are one 1 income and looking to having a portfolio big enough to be financially free.

Any advice would be greatly appreciated. This is going to be my first deal and I want to make sure all my ducks are in a row.

I have a 1 year old son and we are one 1 income and looking to having a portfolio big enough to be financially free.

Sabrina Maples · Answer

Thank you for in feedback. I appreciate it!!

Jay Hinrichs · Answer

of course there is risk and your risking your personal residences equity.. if it does not go right thats what your friend is warning you against.. especially for someone who is not experienced.

Wayne Brooks · Answer

It would be Much safer to follow your banker’s advice....maybe try to borrow the rest from friends/family. When a project with hard money rates goes sideways.....it goes sideways hard and fast. Usually they a higher rate triggered by your first default.