Re: Hard Money or Traditional Financing? - Posted by Kevin Subbert
Posted by Kevin Subbert on January 20, 2001 at 24:26:44:
My advice is to not ever use any money secured by your home as a means to purchase investment property. Hard money, on the other hand, uses the investment property as security, if something goes wrong they forclose on the INVESTMENT property.
Hard money lenders will only lend you 65% LTV so you need to get a discount when you buy. They usually want to be in the 1st position so you cant get a hard money loan just for a down payment.
An idea that comes to mind to get into the place cheap is to have the seller create a 90% 1st mortgage and a 5% 2nd, and you come up with the other 5% cash. Then have the seller sell the 1st at closing for the cash out he needs and carry the 2nd. If you have good credit and the property can show good cash flow, the seller shouldnt have to discount too much.
Just my thoughts