Hi I'm looking to purchase real estate within a year or two. I'm in the Air Force so I have access to the VA loan to buy up to four units at once. But this post isn't centered around purchasing residential properties. So from what I've been watching on YouTube by people like "Grant cardone" etc, they don't use their own money when it comes to purchasing big deals. They use other peoples money, pay them interest on it, then take control of the property. I clearly don't have a fund like he does but wouldn't this be the same as getting a hard money loan? I'm getting money from others and paying interest on it. I'm not going to go straight to commercial real estate, I'm definitely going to do my due diligence and learn real estate first before I jump into anything.

Just for fun, I've been analyzing apartment deals just to run numbers and see if these deals would work. For example, (I'm making up numbers) let's say I have to put 25% down for an apartment complex that has 100 units. Of course I won't have the cash to do this. Im thinking a hard money loan would be my best option. I've been researching some hard money lenders in my market and I actually found a reasonable lender. For BRRR method they go up to 3 years and of course interest rate will be around 9%+ which is fine with me. Why? Because I'm not using any of my money. So in general would this be a good option? They cover the down payment + extra for renovation costs (if needed), and I finance the rest with another lender. I hold the property for 3 years, increase the rents at some point, hold onto the cash I get after all expenses including mortgage payment and hard money loan payment just in case the property doesn't increase in value as much as I thought. After 3 years refinance, pay off hard money loan and I take control of the property. This is all hypothetical so I might be missing something.

Questions:

1. Is this realistically doable?

2. Has anyone ever done this to purchase commercial real estate preferably apartment buildings?

3. Am I missing anything? I’m clearly inexperienced.

4. if for whatever reason I cannot pay the hard money loan company back, what would happen? Would they just take the property for themselves? Will they take my other assets prior to working with them?

Thank you all for replying.

Fort Lauderdale, Florida

0 Votes