How to Buy Rentals With No Money Down Using a Hard Money Refinance

  • Please let people know private money is just not given out to anyone. We have runs and guidelines we follow. We do not want to own you property, we want you to pay our note.

  • Thomas Coburn says:

    Hi Mark – All the hard money lenders I’ve found in the Seattle area want me to put at least 20% of my own money into a deal. I’m focusing on fix-and-flips for cash flow, and ultimately buy-and-holds. In your experience, in a buy-and-hold scenario, can I ‘pull’/cash out my 20% down payment if/when I refinance a hard money loan into a long-term/fixed rate mortgage? If not, I’ll quickly run out of cash if I buy-and-hold as my 20% in my market will usually be $30-$60K. Thanks.

    • Hi Thomas, You can pull out money in a refi but many banks will make you wait 1 year to take out cash. Usually hard money lenders will lend with less than 20% down, but you may have to build some trust with them first.

  • Andrea R. says:

    Mr. Ferguson, I have aprox. $35k available but I’m starting up. Hard money is my only option to finance deals. I have been told that I have to have the funds for closing, etc. , and am hoping the $35k cover all that. I would like to start with rentals as I think there is less risk than flipping (at lest at my level of experience) and here in FL, I think renting is a relatively easy thing to do. Do you have any recommendations so I can better use the limited funds I currently have? Thanks and I appreciate any guidance.

    • Mark Ferguson says:

      Hard money will be very hard to use with rentals because it is usually only a one year loan. With 35k have you talked to a traditional bank lately?

  • Can I get a hard money loan then refinance it with a bank to get lower interest rates

    • Mark Ferguson says:

      Yes, but you must be able to refi the entire hard money amount.

  • Hey Mark, I just got an offer to private finance the 25% down payment on an investment rental. How do you recommend that I structure this to make sure I’m in line with bank rules for the 1st mortgage? I’m in a time crunch, and I’d love to see how we could collaborate.

    Lmk what you think 🙂

    • Mark Ferguson says:

      The private money will have to be a second. Most banks will not care if there is a second as long as they are in first position.

    • Haskell brown says:

      I. Want. To get a hard money loan
      For 300k. For a rental property down payment. With an exit plan of 14 months and the HML ON THE DEED

      • Mark Ferguson says:

        For just the down payment?

  • Mark – what are the mechanics of the loan in regards to title? Do I take title of the property? If so, how does this prevent me from having to season the property before refinancing 2 months later after repairs and with a higher appraisal?

    • Mark Ferguson says:

      Yes you take title. With a fannie mae refinance there is no seasoning as long as you dont take cash out. Since you are refinancing the hard money loan, you are not taking any cash out.

  • Hey Mark i like your videos. Had a question before I jumped into it. I was contact by a seller with a rental property with no problems and has a tenant. Would it be ok to by the property with hard money and refinace it. And go from there

    • Mark Ferguson says:

      Why are you using hard money?

  • Sal Zafar says:

    is there any monthly payment for HM? like interest only?

    • Mark Ferguson says:

      Depends on the lender. Some make it all due at the end and some require payments.

  • Rodney Watson says:

    Is there any way I can purchase buy and hold rentals using HM with the idea to refi in 2 or 3 years because my credit score is 615. So I think I need more time than 1 yr to qualify for conventional lending.
    I have 40k liquid to put into the deal.

    • Mark Ferguson says:

      Some hard money lenders may lend that long, but not many

  • Hello Mark! this information is great, i have some properties that i have bought using HM, i did it this way because my credit score was not high enough, now is around 700. Do you think banks will be able to refinance my rental properties? they are five properties all rented (duplexes and cuads ). When is the right time to approach the banks?

    • Mark Ferguson says:

      I would think so. I would talk to them right away.

  • Catherine says:

    Hi Mark. I am just learning about HM and have little to no money and poor credit. I would like to purchase a property that would make an awesome flip. I have no prior experience flipping houses but I have all the research on the property, market, repairs etc. I am certain that the HM lender can gain a great return. Are there legitimate HM lenders that will approve a loan in this scenario and can the closing costs be incorporated into the loan?

    • Mark Ferguson says:

      Maybe, but if I was a hard money lender I would be worried that you have bad credit no money and have never flipped. That is pretty risky for them.

  • Hey Mark, been lurking on your blogs for a while now.
    After months of reading, I still don’t quite understand how so many people can have so many properties using the Buy/Hold strategy. It looks like the most feasible and realistic way is the 20% down payment and traditional loan option.
    Both me and my wife are doctors, no kids or no loans as of now. We live extremely frugally and save up a decent amount but have been blessed into this position. Using the 20% down method we can probably buy 4 homes in Texas where properties cost much less. However most people are not in our shoes and may not have double professional incomes. So how are most people getting so many properties with buy and hold? Are they simply just borrowing from their parents..?

    • Mark Ferguson says:

      It takes time and if you get great deals, you may be able to refinance, take cash out and buy more and more.

  • Casey Harris says:

    Hello Mark, I’m a new investor and I was wondering how did you pay your sister 8% back on her investment?

  • Lance Caver says:

    for hard money loans for a but and hold , could you explain a little more about getting it refinanced and when to do it?

    • Mark Ferguson says:

      With a Fannie Mae loan you can do it right away. Others you may have to wait 6 months or a year.