Rental Property Investor · Green Bay, WI · Member since 2019 · 6 posts · 2 votes
As a new investor I quickly ran up my debt to income ratio with two properties(the bank wont count my rental income for two years). Ive bee looking at hard money lenders and other ways to obtain properties. How does HML work and what are some of the pros and cons? What would be a good rate from a HML?
Hard money is best for flips. Not as much for rentals. They are high interest rate short term loans. So you would have to be able to refi pretty quick to pay back the loan for a rental property. You want to look at private money or a joint venture partner for more flips. Or try smaller mortgage companies that might be able to work with you.
You may find that many of the smaller home town banks offer a rehab to a permanent loan where you borrow at a higher interest rate and then once it is renovated and tenanted converts to a hold interest rate and starts amortizing. But for this type of loan you need to have the provable income and reserves to qualify. Although I heard from Michael Leech that he has this loan at Gateway Mortgage here in KC and I swear it is 100 % based on the income of the properties, not the investor - so give him a goolgle and tell him I said to call - he is also listed on the MAREI website under Business Associates.