private party investor loan for real estate?
Question by Mike V: private party investor loan for real estate?
hi im a first time home buyer and would like to buy a 50k condo. i have a friend who’s friend has money in the bank who is willing to loan me 50k for a condo at 9% interest rate for 5 years. can i buy a condo like this. any advice on experiences would be appreciated
Best answer:
Answer by Ed Atun
Yes, this can work. You get the money to pay cash. Cash offers get the best counter-offers from home-sellers. The friend gets a much better interest rate than if he left the money in the bank.There are some problem areas. It has happened that the “friend” changes his mind on closing day. You are sitting at the title company waiting for your 50K and it does not arrive. When you call to ask him, he either avoids your call or he says he changed his mind. YOu will lose your earnest money. There is almost no way to stop this from happening because he won’t want to loan you the money prior to your ownership of the condo.2nd problem is if you are not able to get a loan in 5 years. This happens a lot. The condo has too many rental units and banks refuse to loan. You would have to have a back-up plan to get him 50K.
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