Using Unsecured Loans for Down Payments to Scale Up!!

[John Bongers]

Hello,

I've just bought my first rental property and am treating it as a mini BRRRR where I'm hoping to get a decent amount of my money back when I refinance sometime down the road. To get the deal to go through I used a HELOC for the down payment which leaves cash strapped so I can't scale up at all. Once my place is rented it will cashflow well and I was thinking of looking for an unsecured loan where I basically set the term so that 90% of my cash flow over the next 6 years would pay off the loan. Also, when I do refinance, I could pay off the loan early. With the cashflow of this property it would be something like $40,000 over 6 years at 8%. Additionally, I would try to pay off the loan early using the refinance, but payback the entire 8% over 6 years. Basically, if I pay it off early, it would bump up the 8% to 9-10%.

  Does this sound like a real strategy, or am I way off? Also, would this limit my ability to get traditional financing on a second property? My goal (if this is even remotely possible) is to use this idea to scale up now so that I can pay off these unsecured loan and leave my W2 job by 2032.

Any advice would be greatly appreciated.

Thanks

John Bongers