Downsides to Using Private Money Before Traditional Bank Loans?

[Ben Vonderwahl]

Hello Everyone,

I am currently looking to expand my real estate empire haha. I currently own 8 manufactured/mobile homes in Pueblo, CO. I have applied for a HELOC against my primary residence but was denied due to lack of credit history (all of my properties were paid for in cash). My family is ready to lend me money at 10% interest in order for me to continue growing. The prospective properties are priced around $30,000 to $50,000 and will easily service the debt and likely cash flow $300-$400 a month. However, I am concerned that if I have multiple promissory notes owed to my family I will not be allowed to take any conventional mortgages in the future due to the current maximum of four mortgages allowed at a brick and mortar bank. Are promissory notes owed to private individuals counted towards that mortgage limit? My goal is to exhaust my family funds over the next couple years and by then have built an excellent credit score and income (: so that I would at that point be able to switch over to conventional financing for future expansion. Could be way off here and any direction would be appreciated!

[Lee S.]

the loan limit is now 10, if a lender tells you theirs is 4, find another lender.  Take advantage of the private money, I am.  You said in another thread your dad is a successful investor, don't be ashamed to take advantage of your situation.