First deal, Hard money or conventional?

Question

Hi Everyone. I am looking into buying my first property as an investor in the Cleveland market (preferably duplex) for a buy and hold / BRRRR. I was recently an agent in that area and understand the landscape and networks fairly well.

My question is should I use a hard money lender to fund this first purchase or use a conventional? I have saved up around 15k for a down payment and by the time I get my eggs in order, should have around 20-25k. I have a full-time job and my expenses are low. I am 22 years old want to know what the advantages/disadvantages are for each method? Especially at my young age. Thanks everyone!

Jason Dhanraj · Answer

@Ian Kurela Well I should say that if we look at hard money your positive is your able to get money faster to close on your deal. However, hard money is the lender set the amount of interest you pay back which is usually higher than your bank loan.

Conventional is positive best for lower interest  and mortgage plans like 15 or 30 years so more flexibility to pay. A big Con is the verification process of income source, credit score, etc. Ian two things i will tell you. One, look at how long the seller is willing to wait. Two, figure out what you really want to spend for a property. these can be factors of which directions to take.

Overall, my advice to you start out with conventional loan if you can so you feel more comfortable of the process. then after a few deal then you can venture off into hard money. Starting out will be hard because your young age but i think you'll do fine old friend.

Tarik Turner · Answer

Conventional money (if you can qualify is always going to give you the better rate) The downside is it usually takes longer to close and the process is more stringent

If the conventional loan doesn't work look at a few longer term portfolio products that are available out there