Hard Money, Bank, Private Financing ?

[Roy Means]

Ive decided I want to create financial freedom through real estate investing. And the BRRRR method (Multi-unit) is the way I want to go with flips on the side.

Im about a month in on learning and self educating, I have a few quick questions about the financing/Money part of the deal.

With Hard money lending do you pay monthly payments on the interest of the loan as soon as you close the deal? For example: 100k loan for the house, 8-14% Interest, Monthly payment 8-15,000

How would you be able to pay that monthly payment while in the process of rehabbing and putting tenants in place if your just starting out?

If the goal is to refinance and then pay off the Hard money loan. If you had a plan together and in place Would the lender wait 8-12 months before the first payment? Is that normal? Until Ive completed the Refinance to pay them back?

I do apologize for the long paragraph would love some feedback on this if possible,

Thank you all,

[Stephanie P.]

Originally posted by @Roy Means:

@Kyle J. Thank you for your response. So if the Hard money loan term was for 12 months and the loan was for 100k (100k divided by 12 months = 8,3333) plus interest?

Should the term be longer? To bring the monthly payments down?

Would you have any recommendation on how long you should keep the short term loan before refinancing?

I’ve been seeing 12-24 months on some lenders sites.

Thanks,

 To figure an interest only payment it's:

Loan amount x interest rate / 12 months.

100,000 x 12% (.12) = $12,000 / 12 months = $1,000 per month payment interest only.

You should be able to get in and out of a flip in 6 months.  Much longer and you're eating into your profits.  Carrying costs are a major factor in profitability.