Does it Make Sense to Buy Rentals With Hard Money?

[Jeff Montanya]

Does it ever make sense to purchase a Buy & Hold property using hard money? If so how do you eventually get the hard money lender paid back if you're simply renting out the property and not flipping it.  Would you at some point just  refinance the property into a conventional loan? How could you do this if there wasn't a lot of equity, but the property was cash flowing over $300 a month? I've been running the numbers on houses as rentals and I have found some very good prospects, but I don't have the money to purchase the homes outright or the 20% down payment for conventional lending. Want kind of incentives could I offer to private money lenders to help me acquire rental properties? What would the structure of these deals look like? Thanks!

[Mike Buchheit]

The first several can be the hardest. Have to get very creative on source of hard money. No wrong answers. LOC, credit card, family, friend.

I typically go after properties I can buy $0.60 on the $1.  Then put $.20 on the $1 into rehab.  Leaves me 20% equity and the bank will finance up to 80%.  No money out of pocket -- go to the next.  Two deals per year for 24 years and 48 properties later I have close to $1M net worth in real estate and still growing.