Secured Personal Loan for Downpayment. Yay or Nay?

[Christopher DeLucien]

I'm trying to open up this discussion in terms of both good and bad...

After speaking with a few people and lenders on acquiring money for a down payment on a multifamily property, a secured personal loan came up as an alternative to coming up with enough money for part of the down payment (oh, say $10,000).

That means:

> Secured personal loan (putting a lien on a car as collateral) worth $10,000 at terms of 4.25% APR over 5 years. - Total Down: $20,000

> A mortgage for $102,000 @ 5% over 30 years , meaning a monthly PITI of about $800

> 2 Duplexes (4-plex) with total monthly income of $2,400

*these numbers are somewhat irrelevant to the question, but is just an attempt at giving real world data*

The question is: with the acquisition of another mortgage, what are the upsides and downsides of acquiring a secured personal loan as well? Would mortgage companies say "no deal" if another loan was acquired for the same purpose?

All comments and criticism welcome

[Ned Carey]

Generally the mortgage company for the property is going to say no to borrowing the down payment. If you borrow that money far enough in advance of requesting the mortgage loan, it may work. 

Keep in mind that the extra debt of the secured loan will be counted against you, when qualifying for the mortgage. 

More importantly is if you have no cash reserves you are asking for trouble. Problems and expenses for real estate can be random. You could have unexpected expenses you first month or two. I felt like I was on the "appliance a month plan" for my first rental. How are you going to pay them?