Borrow from Hard money (70%) to offer 100% Cash

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Borrow from Hard money (70%) to offer 100% Cash

Kevin Kim
Member since 2020 · 69 posts · 12 votes

Hello 

I would like to check if it is good strategy to borrow 70% of offer price form hard money (30%: I have cash) so I can offer like 100% cash offer. Once it is closed, I will refinance with 30yr mortgage. Is my understanding ok? Any pros/cons? Obviously, I need to refinancing and will need to go through the same process again but I think this will give more chance to win the multiple offers. Appreciate any feedback.

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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
3y

using hard money is not cash purchase its still subject to the HML financing the deal.

I know when I get proof of funds from HML especially some one off I never heard of I wont rely on it .. many times the buyer has been hood winked by a fake lender .. and the letter is useless.. I just had one that cost the borrower his EM . because the HML was a fake and gave a fake pre qual letter. wE kept the EM

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  • Nathan Grabau
    Realtor · Longmont, CO · Member since 2021 · 577 posts · 631 votes
    3y

    There are easier ways to do this. My lender offers a bridge product that makes your a cash buyer for less money than a HM lender is going to charge, then establishes a convention loan after the transaction closes. It is my understanding that many lenders have products like this, but I am happy to get you in touch with mine if you are in Colorado! 

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    3y

    using hard money is not cash purchase its still subject to the HML financing the deal.

    I know when I get proof of funds from HML especially some one off I never heard of I wont rely on it .. many times the buyer has been hood winked by a fake lender .. and the letter is useless.. I just had one that cost the borrower his EM . because the HML was a fake and gave a fake pre qual letter. wE kept the EM

    Podcast Guest on Show #222
    JLH Capital Partners51 Review
    WebsiteView Page
    3Reply
  • Kevin Kim
    OP
    Member since 2020 · 69 posts · 12 votes
    3y

    Thanks Everyone for your advice. 

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  • Eugene Neal
    Lender · Member since 2022 · 138 posts · 20 votes
    3y
    Quote from @Kevin Kim:

    Hello 

    I would like to check if it is good strategy to borrow 70% of offer price form hard money (30%: I have cash) so I can offer like 100% cash offer. Once it is closed, I will refinance with 30yr mortgage. Is my understanding ok? Any pros/cons? Obviously, I need to refinancing and will need to go through the same process again but I think this will give more chance to win the multiple offers. Appreciate any feedback.


     It depends on your exit strategy as the buyer. Also will the property require rehabilitation as well? We operate as a direct lender so each suit is tailored different. What are your exit strategy thoughts? 

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  • Dylan M. Davis
    Lender · NJ · Member since 2022 · 129 posts · 18 votes
    3y

    If you're seeking funding, do a healthy bit of due diligence about the company. If you can't get someone on the phone they're a scam. If they don't have a good presence online, they're not a worthwhile contact. Using a bridge loan and then refinancing into a DSCR fixed mortgage is the best way to get into a distressed deal that need value-add and stabilization.

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