Quick House Hack Deal - Cash or Mortgage?

Question

I recently graduated from the University of Georgia and am now working full-time with a redevelopment company as a property manager. My lease for school expires at the end of July and now seems like the perfect time to buy my first home/investment property. I have a couple buddies who want to rent out the extra rooms from me but I need to find a place quick. I have a private lender who would pay cash if he agrees the deal is good. I'm worried I won't be able to find a deal before my lease is up that he agrees will provide value to both of us. Should I be prepared to take out a mortgage and settle for a deal that may not be what I'm necessarily looking for because I am on a time crunch? Thanks for any advice!

Andrew Powers · Answer

So it sounds like you have 2 routes to finance the deal currently: private money and traditional bank financing. 7 months is sufficient time to find and buy a house... is there a shorter timeline with the private lender?

Bank financing is very cheap right now so unless the private lender is giving you even better terms, I'd do the bank. And on top of that you can get low down payment loans since you will be owner occupying... FHA or there's a first time home buyer loan for single family that offers 3% down payment

Aaron W. · Answer

@Trey Wilcox That's exciting to see you are looking for your first property through a house hack!

What rates is the private lender going to charge you for lending their cash to buy the house hack? What does the private lender consider a "good deal"?  It may help to ask him/her to provide specific criteria of the good deal.

It may not be prudent to force yourself into a bad deal just to get private money financing. I'd value finding the right deal that provides the right returns. Even if it isn't a great deal, it will be better than forcing yourself into a bad deal.

In short, know what returns your private lender wants and what you want, then go out there and find the property that meets those numbers. Find out at what interest rate your private lender will lend to you and compare it to the current bank interest rates. It may not be much of a difference.

Finally, there is plenty of financing out there if you can find a great deal. In order to find the great deal, you will need to know what makes a great deal. This is done through education and deal analysis practice.

Good luck!