A certain percentage of tenants will pay late, a certain percentage will default, and a certain percentage will require eviction.The “problems” increase as the desirability of the property decreases.  

**Risk of Cross-Collateralization**: All properties are typically used as collateral, so if one property underperforms or defaults, it can affect the entire portfolio. 2.

@Sheri Rolfe if you’re already under contract, read through it carefully as it will usually explain if there’s a way for you to cancel without you being in default.

For example you could use your C-Corp to take on debt and pay you A LOT MORE in your w2 earnings for 2 years and THEN use those earnings to qualify for LARGE personal debts and then potentially default on those debts.

Isnt there a topic now about how an investor is crumbling over having their first tenant default?

Each option has its pros and cons that can impact your investment strategy and overall success.HELOC (Home Equity Line of Credit)Pros:Lower Interest Rates: HELOCs typically offer lower interest rates compared to hard money loans.Flexible Terms: You only pay interest on the amount you draw, providing flexibility in how much you borrow and when.Revolving Credit: As you pay down the principal, the available credit replenishes, allowing you to use it for multiple projects.Longer Repayment Periods: HELOCs often have longer repayment periods, which can make managing payments easier.Cons:Qualification Requirements: HELOCs require good credit and sufficient equity in your primary residence.Secured by Your Home: Your primary residence is collateral, which means a default could risk your home.Variable Interest Rates: HELOCs often have variable rates, which can increase over time.Hard Money LoanPros:Easier Qualification: Hard money lenders focus more on the property’s value and potential rather than your credit score.Speed of Funding: Hard money loans can be approved and funded quickly, which is beneficial in competitive markets.Flexible Use: These loans are designed for real estate investments, making them suitable for purchase and renovation costs.Cons:Higher Interest Rates: Hard money loans typically have higher interest rates and fees compared to HELOCs.Short-Term Loans: They usually come with short repayment terms (often 12-24 months), requiring a quick turnaround on your project.High Fees: Origination fees and other costs can add up, increasing your overall project expenses.For a BRRRR strategy, a HELOC might be the better option if you qualify and have sufficient equity in your primary residence.

99% of home buyers in the US don't have a cash to purchase a home they will be living in (they loan that money from the bank, who truly buys and owns that house while they keep a Deed of Trust, which they use to kick so called "home owner" out of the house once borrower defaults).

There is roughly (in NC) a 12-18 month lag between mortgage default and any legal proceeding.

My questions is, let's say something bad happen on the sellers life say divorce, accident, bankruptcy anything like that and while I keep posting my monthly payments to the seller the payments from the seller to the lender stop.Do I have any recourse at that point if the lender decides to foreclose the property due to seller's default?

In MD we have loss-mitigation laws passed after housing crisis that exposes you to great deal of liability if you contact people 60+ days in default  and offer to buy their homes.