Financing question private lender to homeowners mortgage

[Kyle Plants]

I’m sure I’m not the first to think of this idea but I haven’t heard of anyone discuss it. My plan together started in my buy n hold venture Is to gey a prIvate loan from a famIly member for tge coast of the house plus rehab to get It Into rental condItion then turn around and get a 30 yr fIxed rate Mortgage and use that money to go buy more properies, rinse repeat. Ive asked a couple of my babI buddies but none of them have replied to me If thIs can be done. Anyone on BP ever tried thIs before or know of any reason why It cabt be done? Seams lIke the pwrfect In strategy.

[Stephanie P.]

@Kyle Plants

Please don't take this the wrong way, but you really need to do a lot more reading and get a much better feel for how mortgages work before you begin this real estate undertaking.  If you don't have the basics of how money works in this business, and I'm talking the very basics, then you need to take a step back and find out before you make a huge mistake.  Not being mean, I'm just concerned for your well being.

You have to understand the position a private lender is in, how their money is being used, when it is used, the cost of funds, when it will be paid back, positions of the mortgages for title etc... 

I'm afraid you're not ready to do this.  Please read some blogs, listen to the pod casts and really educate yourself before you jump in; not just on a thread.  Maybe you are and I'm missing something.  It seems like you have a private lender that is ready to give you money which is a huge leg up in this business.  Don't squander that opportunity but understand what you have.

@Brian Garrett.  You've been very generous with your explanations when answering the questions. Am I wrong? There is huge potential for disaster here, but done right, there could be a huge upside as well.

Stephanie