We have been approached by different individauls who want to borrow money.  

hard money is usually for non owner occupied properties with a first position mortgage.Also, I don't believe a bank will loan you money using a down payment that has been borrowed.

The key for the borrower is to understand the difference between the direct lender and loan broker.

The due on sale clause can not be exercised by the lender as long as title is transferred to a land trust where the borrower remains a beneficiary. 

Not sure i'd spend all of my energy on this option either.I don't know a bankruptcy lawyer alive that would be dumb enough to think a bankruptcy discharge conveys free and clear title to the borrower.

Purchase Price:$78,000.00Purchase Closing Costs:$1,500.00Estimated Repairs:$10,000.00Total Project Cost:$89,500.00After Repair Value:$90,000.00Down Payment:$5,250.00Loan Amount:$72,750.00Amortized Over:30 yearsLoan Interest Rate:4.00%Monthly P&I: $347.32Total Cash NeededBy Borrower:$16,750.00Monthly Income: $1,300.00Monthly Expenses: $1,011.15Monthly Cashflow: $288.85Pro Forma Cap Rate: 8.53%NOI: $7,634.00Total Cash Needed: $16,750.00Cash on Cash ROI: 20.69%Purchase Cap Rate: 9.79%Total operating expenses: $663.83Mortgage expenses: $347.32Vacancy:$78.00Repairs :$130.00CapEx:$130.00Insurance:$100.00Management:$130.00P&I:$347.32Property Taxes:$95.83Income-Expense Ratio (2% Rule): 1.45%Total Initial Equity: $17,250.00Typical Cap Rate: 8.00%Gross Rent Multiplier: 5.00Debt Coverage Ratio: 1.83%ARV based on Cap Rate: $95,425.00Income-Expense Ratio (2% Rule): 1.45%Total Initial Equity: $17,250.00Typical Cap Rate: 8.00%Gross Rent Multiplier: 5.00Debt Coverage Ratio: 1.83%ARV based on Cap Rate: $95,425.00

Many lenders especially ones that had loans written in 06-09 have insurance and government backing that if the borrower defaults they will get total debt amount paid back.

Including complaining to the State's SEC dept etc that you borrowed funds without being registered etc etc.If the lender is a long time friend (as they are in my deals) then just an operating agreement that spells out cash splits, cash call requirements etc.  

Lenders underwrite the property more than the borrower which is different from local and regional banks.  1031 your proceeds.I have other clients in California doing the same thing.

This might not be a great strategy for cashflow though. 3-5 year loans tend to have high monthly payments.Hi Scott,This is a great idea, however unsecured/borrowed funds cannot be used in a fannie/freddie conventional loan scenario.