Down payment/ Private Money loan assistance

[Margeaux Appold]

Hi everyone, 

Looking for some advice here. 

Details of the potential deal

Large and unique single family home (~5,700 sq ft) plus a large garage with apartment above it on the same lot. Would use both as short term rentals. Seller is interested in paying to occupy the property post sale for a predetermined period of time while they find new housing arrangements, removes their belongings, etc. Of note, but not overly important, seller is very tidy and keeps the property maintained. Their "rent" would cover the costs of the loan while we fixed the garage unit to be income producing, and they would continue to pay utilities, etc.

Garage apartment needs some work, but almost all aesthetic and will be income producing within a month. Seller knows this would be the plan.

My husband and I qualify for the loan, but cannot do a second home loan because this home is in the same zip code as we are, so have to do a standard investment loan it seems. We have the cash to put a down payment of 20%, but we're really trying to find a way to keep most of our emergency fund just that - for an emergency and not draw from this.

Looking for a private lender has been confusing and cumbersome, but I think the deal makes sense. We've reached out to friends/family about loans and have not had any interest.

Any advice for finding private money lenders or hard money lenders to help cover the down payment? I've read through tons of threads on here, and many of them say things like "just look harder," so hoping to get some general direction on where/how to do just that. Thanks! 

[Mike Klarman]

So, I get asked this all the time.  How do I do a real estate deal without putting much up.  The short answer these days?  You don't. 

Because people claim to be Private Money doesn't mean they are going to just come in and cover 100% of the deal for you because it's their money and they can if they want. Truth be told, Private Lending terms are pretty much the same as hard money. In fact the best DSCR rates on the market right now come from one of the big hard money lenders, not private money.

There's no way around liquidity right now.  Banks want it more than ever.  I won't work with anyone who doesn't have 75k -100k minimum.  Because I know if liquidity is a problem then the deal has no shot.  These days, if you need to scramble and gather four accounts to show just enough reserves to do the deal, you know what the bank will do?  Deny the loan.  More than 1 lender had me do that to people.  It wasn't fun.