Hard money for rentals

[Andre Fierro]

Hey BP!

I’m trying to understand how hard money would work for acquiring a multi family unit per say.

I get the whole buying a distressed property fixing it up renting it and refinancing or even in a flip.

I grasp the whole Beaty of this process in this scenario but how would this work in a property that doesn’t need much rehabbing and might be already rented? Can this strategy work in a property that you can’t really add much value to but provide good cash flow?

[Ronald Isgate]

I would say that a HML could have a place/use - but its absolutely not a long term solution. I represent quite a few lenders, and all of them try to make sure that the borrower has exhausted all conventional avenues first. There are two very common reasons for using a HML - a) Hard Money can help you buy a property very quickly - so you either dont loose it or you can strike a better deal moving so quickly; and b) some banks these days, regardless of property condition, want to see a stabilized property (under your ownership) for 6+ months. But of course the math has to work out for you. If you go the HML route, do some due diligence on the lender (there are alot of scams going on right now) and find out all their terms so you can negotiate the best deal (pay attention to all fees and pre payment penalties). Best of luck!