Information disclosure to banks when using private money

[Chris R.]

Hello all,

Today I ask a hypothetical question. If I had a private money lender finance me on a downpayment of say $50,000 at 6% with agreed upon repayment terms,

(1) How and what do I tell the bank about how I got that money?

(2) What does the lender have to do to document it on theiir end?

It may be a gross over simplification of a situation but it's a potential way for me to purchase a 2nd multi family.

Thank you!

i

[Daniel Karbownik]

you will have to show the source of that money. If you say it's a loan, they will most likely want to see the loan docs. But you will probably get stopped in your tracks because most lenders don't allow the down payment to be a loan. It makes no sense for them - you are financing the property 100% then. Most banks will only finance a rental at 80% max LTV.. you are effectively trying to get a 100% LTV, just from 2 different lenders.

If this works for you, let me know what lender you use because I will do the same thing as you.