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Updated almost 12 years ago on . Most recent reply
![Mathew Wray's profile image](https://bpimg.biggerpockets.com/no_overlay/uploads/social_user/user_avatar/137590/1621418819-avatar-mathewwray.jpg?twic=v1/output=image/crop=683x683@72x0/cover=128x128&v=2)
private/hard money lending exit strategy question
Hi all,
I've been doing a lot of reading and research on finding other ways to buy and hold apartment properties. By other ways I mean outside of the traditional 25% down mortgages or commercial loans. So lets just pretend that I found a property for 1.0 million (for ease of the example) and had a combination of 30% private money and 70% hard money already lined up. We know that the hard money lenders are going to want their money back within the year. From what I've read it seems like I should be able to find a local bank or an investment bank who will refinance the loan, assuming that it cash flows and is increasing in equity through decreased expenses and increased income coming in.
When going to those local banks do they look solely at how the property is performing or does the owner's personal credit come into play? I have quite good credit but I have a house with less than 30% equity which is holding up traditional banks from loaning me more, hence my search for other forms of financing. In the vast experience of BP is that likely to be a problem with a refinance of a private deal as well?
If I got the refinance would they typically be able to refi the whole amount so I could pay back both the PM and the HML or would it only be 70% that they'd allow. I know that seems like a stupid question, who'd only refi part of a loan?!? But, I'm trying to get my base facts straight before I start trying to put a deal together with money coming from multiple sources.
Thanks for any help,
Mathew
Most Popular Reply
![Chris Martin's profile image](https://bpimg.biggerpockets.com/no_overlay/uploads/social_user/user_avatar/36028/1623762740-avatar-wakeproperties.jpg?twic=v1/output=image/crop=2988x2988@1162x0/cover=128x128&v=2)
I don't get it. You have property with a $1M acquisition price and a combination of 30% private money and 70% hard money already lined up. You personally don't have a penny in the game. And the question is will a bank "refi the whole amount so I could pay back both the PM and the HML..."? I would say your chances are 0. It is doubtful a PML would fund your deal... unless it's family and they don't have full understanding of the significant risk.