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Updated over 10 years ago on . Most recent reply
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Which financing would you rather choose?
If you needed to finance $100,000 for an investment, which would you choose:
a) A conventional loan at 4.25-4.50% for 30 years
b) A loan from a family member for 0% interest, but have to pay $10,000-$15,000 back per year.
Now, it seems great to have a 0% interest loan, but do the numbers make sense? if rental income is $1500 or so per month, after expenses, it make actually be a negative cash flow. In the conventional loan, it would cash flow positive ~$400.
Hmm.. decisions.
Most Popular Reply
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It depends on whether that loan from the family member was tied to the property (lien) and had to be paid back when you sold it or refinanced it. If it was just a straight loan of 100k that had to be paid back (????) with a cost of 10-15k/year, I'd choose that one hands down.
Joe V