Do I borrow the money for rehab 10%

[Forest Williams]

I have a chance to barrow $20,000 from a loan club. What I would like to do is use it along with a Hard Money Loan as the 10% I need (example Hard money lender does 85 or 90%%)

Will this work is it a good idea...??

Thank you

[Mike H.]

The answer is yes. Thats a great way to compliment your hard money loan and achieve no money out of pocket of deals. 

Hopefully, you have some money in the bank just in case you can't sell the house right away and need to make payments for awhile. Or if you decide to refi the house and pull all your money back out.

But its the perfect way to do it. 90% from the hard money lender and use the lending club money for the other 10%.  

The risk there is that if your flip loses money, you will not be able to pay off your loan club loan and could end up owing them a bunch of money. That being said, thats the risk you run with every deal out there - that you might lose money and will need to eat the loss.

I would definitely do it.  But now you have 100% of very high rate debt which is going to add to your holding costs (not to mention purchase costs). So you're really going to need to cherry pick your deals to allow for the added expense.

But its better to make something than to make nothing.....