Seller financing and Hard Money

[Killa Kam]

Hi everyone, 

Let me start off by saying that I am completely new to investing in real estate. My goal is to build wealth through buying and holding properties with the intent of renting them out. At this moment in time however, I don't have any cash reserves and my credit is poor but I'm steadily working on it. 

I have found a seller in my area who is selling 5 duplex properties as a package deal for 285k. He is willing to owner finance at 8% for 5 years with 25% (70k) down. Normally I would have thought this deal impossible given my current financial situation. However, I recently stumbled upon Hard Money Loans (HML). I've looked at the properties and the financials and it works from a numbers stand point. The properties do have above average ware and tear but nothing major needs to be done so arv may not be super appealing, but all 5 properties are fully rented and generate around 8825/monthly.

My orginal plan was to build my credit and go owner occupied first. But this deal caught my attention and seems like too good of a deal to pass up without taking a shot at it.

My questions are; Can I use seller financing with HML as the down payment? Is there a way to do so without having the cash reserves for a downpayment? Or am I reaching and should just stick to my original plan of building my credit up first?

[Taylor L.]

Are you certain that no major work is needed on the properties, or is the seller saying that?

In principle I don't see why you can't do this, as long as all parties know what's going on. There are hard money lenders that'll do very little down payment, based on the deal. 

However, remember that hard money loans are short term money. They want to be out in well less than a year, so you need to have a way to refinance them out of the deal. How are you planning on paying back your HML?

I suggest you get someone more experienced to look at the numbers on these properties as well. 

You won't lose anything by asking hard money lenders if they're interested in this deal. The worst they can say is no, and at a bare minimum you're getting practice putting deals together.