Brrw 20% Dwn On Invest. I Year Later Can You..
Hey gang,
I am getting ready to borrow 20% down from private money on a four unit at $200k purchase price. I want to knw since money lender is expected to be paid in say..one year. But most banks (80-to 90%) of them will refi you out at 85% LTV. 200k x 20% dwn = 40k. Balance left is 160k. You refi with bank at say...90% LTV, thats only 180k, I will be able to give him back 20k but where will I get the other 20k Plus the 12% I promised with www.it.I won't be able to pay back investor. Another thing to consider, what if market appreciation is low...should that matter. Should I make it a repay in two years instead of one.
So far, I have only used private money to rehab/flip properties for your reasoning exactly. I do not know where the funds will come from to pay back the lender in that short of time.
It is much better to negotiate a long-term seller 2nd.
If you do want to proceed I would lock in a term for as long as you can. I would also make sure that this deal is worth it as most private lenders have limited funds available. Will a better deal come along that you won't be able to fund because this private money guy has all his money already loaned out to you on marginal deals?
Just some food for thought.
GOOD LUCK
Thank you for the reply myfrogger, longer term will be the case to do then.
John