Downside is they usually require more remodel work up front, but the good thing is you can take most if not all your money back out and reinvest into other properties if you have solid numbers.

Downside is you will be competing against others that are trying to do the same so knowing your market is critical.

@Elie Merisier there's almost no downside to getting prequalified for a Hard Money Loan first.  

Yes, our investors expect a solid return, but first and foremost the goal is to mitigate the downside risk to the portfolio.

On the downside I think so many people are chasing these, they get desperate and buy in places that are less desirable in the efforts to "do a deal". 

Only downside risk is if your holdings lose to much value and your forced to sell to cover what's borrowed. 

I think the huge difference when looking for properties to purchase is the investor's abilities to change and improve the cashflow.While you are correct in regards to purchasing less units if the overall cashflow is better, there is a downside to that thinking when you consider the years following the purchase of the property.

It was just to get her to think about goals and dreams first, then I can hit her with "Well... here's how we are going to get there and make it come true"  Ah, she cares about the downside.

Growing economy.The biggest downside I see at the moment is the water supply issue.  

This approach can often accommodate the unique or unconventional real estate investment projects that wouldn't qualify for traditional financing.However, hard money loans are not without their downsides.