Ask Cornerstone: Should I borrow against one deal to fund another?
I’ve found a new property to rehab that requires a cash purchase simvastatin 10 mg. I would normally use my own funds to make the investment, but my money is tied up in two other rehab projects that are currently on the market and in escrow.
Should I use the property being purchased as the collateral or the property that is already rehabbed and is waiting to be sold?
Most lenders would give you approximately 70% loan so you would need 30% down payment plus closing costs. If all your money is in your property being sold, the best option is to use both the property being purchased and the property you are selling as the collateral. This way you get 100% financing plus the money needed for refurbishment.
If your refurbished property is sold than sale proceeds will pay off or pay down existing loan and the collateral will shift only to the property you are refurbishing.
By the way, in many cases private money is the same money other call hard money. The most important thing is how good of a deal the property you are buying is. If the project can absorb 10% to 11% interest rate for 6 months and the charge of about 3 points and still be a profitable deal, go to a reputable hard money / private money lender that can get you the money on time.
Also, FYI, your dilemma illustrates the power of leveraging a hard money loan. Instead of investing 100% of your money into one or two projects, you can use your own funds as down payments to be able to do more projects at once.