All Forum Posts by: Deshawn Lewis

@Deshawn Lewis sure! Since I like the "uglies" and I want to get the best deal possible, I do the initial acquisition using hard money. I explain to the seller that me using hard money is same as cash, we can close in 7 days and there's no appraisal required. 

Then, my hard money lender collateralizes another property I own with a second mortgage for the down payment on the new property (20%). So the hard money loan is zero out of my pocket, and if its a good enough deal I can finance in rehab costs too.

Then I rehab the property, put new tenants in and refinance the hard money with a conventional lender and after closing the second mortgage is released.  So long as the new property has 25% in equity I can refinance and have only the monthly payments out of my pocket.

For example, I bought a duplex for $130k and had $15k in rehab. So I got a hard money loan for $145k and he took a second mortgage on another property for $29,000. I rehabbed it, and the new appraisal came in at $230,00 so the max LTV would have been $172,500 and my loan balance was only $145k so I rolled in the refi costs of around $5k and left the remaining equity in the property. The second mortgage was released on the other property once the hard money lender was paid off, and this property now cash flows $1279 per month and I had 3 hard money payments ($4350). Pretty good deal :)