So what happens if...

[Corey Martin]

I’m always creeping on the forums but not contributing, and I have a ton of questions especially listening to the podcasts. I’m very new to real estate so my questions may sound like they have a rhetorical answer or are blatantly obvious, but...yeah I have no clue. Any and all responses are very much appreciated!

I love the idea of the BRRR method and buy and hold in general. What I have been trying to run through my brain is what would happen in a worst case scenario of the mortgage/loan on whatever property you purchased using a cashout refinance or even a mortgage you have your typical 20% down in, being called due. What are possible courses of action you can take to avoid losing the property and maybe some money in court if it comes to that?

I understand this is unlikely according to other posts in the forums concerning the subject, but I would love to hear ideas on how you guys would dig yourself out or prep beforehand to avoid the situation altogether.

These are the options I assume would be possible:

1. Find another source of money to pay off the loan such as private money/hard money.

2. Don't worry about losing the property and let them take it if you don't have any money in the deal after your cashout and if the property is under an LLC. (I'm guessing this will damage your reputation)

3. Attempt to renegotiate your mortgage terms with the lender.

Thanks again!!

- Corey

[Aaron K.]

If your loan is called (which will not happen) you would just refinance with a different lender, you most likely wouldn't need hard money for any significant period of time and it would be a very bad idea to let the property foreclose as #1 it would damage your credit and #2 you would hopefully have at least some equity that you wouldn't want to give up.