Loans like this can be useful or very dangerous, depending on how you manage your business.The ideal situation for a loan like this is when you have a property that will take a while to get up and running. 

This is a story from my past that provides a perfect example as to why investing in tax liens at auction is so dangerous for any but the most experienced and knowledgable investors20 years ago I purchased a SFR as a long term rental investment that sat on a double lot.  

Insurance is higher in the rural areas of SD due to fire danger.

Delays, unforeseen repairs, and underestimating budget up front are all much more dangerous occurrences once a gap lender is involved. 

Remember, the notion of amassing wealth without investing is a dangerous myth perpetuated by self-proclaimed experts.

Remember, the notion of amassing wealth without investing is a dangerous myth perpetuated by self-proclaimed experts.

I think that the attempt to scale super quickly is more dangerous than whatever the first raise is. 

Remember, the notion of amassing wealth without investing is a dangerous myth perpetuated by self-proclaimed experts.

But you are putting your other tenants in danger by not managing YOUR RESPONSIBILITIES.  

From my perspective, they are operating in a dangerous gray area.