Hey welcome to another edition of 60 seconds insights. Now today’s question comes from Jonathan.
Jonathan asks, are hard money lenders used for single-family properties or multi-family properties?
The answer to that question is to use them for both. The trick to using them is, because most people start with hard money lenders, the fact that you want to find the lenders that will loan you at 65 cents on a dollar with no money down. Typically they will all loan you at 65 cents a dollar but you want to get a lender who will loan you with no money down.
So the trick is to buy deals at $0.60 on the dollar, subtract the rehab costs, negotiate down from there and you can get in and rehab with none of your own money out of your pocket. That’s how I got started with multi-family properties, first I started with credit cards then I went with hard money lenders, then if the interest rates are between 18 to 22% they charge you 3 or 4 points. But the beauty is, the income from those properties will allow you to qualify for a bank loan later on. Then what you can do is re-finance, get the rates lower down to whatever market rate is at that time. Usually way below 8, 9 or 10% and your cash will skyrocket.