HUD Loans: Using Good Debt to Finance Your Dreams

HUD Loans: Using Good Debt to Finance Your Dreams | The Kitti Sisters - 3

Summary: They say what you put into something is what you get out — buttt we beg to differ when it comes to financing your multifamily apartment investing deals. Learn how to get the best results from the least amount of input – by leveraging good debt to grow long-term wealth!

There are few things in the world that we love more than leverage.

Truly, it’s like the gift that keeps giving and giving and giving!  

You can use leverage is sooo many different ways, but let’s chat mainly about debt for a sec. Leveraging good debt is how we can exert smaller input while yielding larger output – which is really the BEST way to grow wealth exponentially. 🙌

Today we’re focusing on one of our favorite methods of leverage that we use in apartment syndication. It’s a magical thing called the HUD loan, and it’s a great way to leverage good debt to finance multifamily apartment investing loans. 

And if you know anything about us, you know that growing wealth through multifamily investing is totally our jam. 😏😏

As rewarding as multifamily apartment investing is, the trickiest part can be getting started. Because, yes. There’s a hefty investment up front, but it also pays off BIG in the long run.

We’ve seen many investors get stuck at the starting line, wondering how to finance such a large investment to reap the very worthwhile rewards. 

Well, that’s exactly what we’re sharing today.

Let’s dive into all things HUD loans, and how they can change your life through leveraging debt to grow wealth. 

Here’s what’s coming ⏬ 

First, let’s recap good debt – what is it and why is it so good?

Talking about debt has a tendency to spark a liiiittle hesitation, and we get why. When you think of debt, let’s just say it’s probably not the word you would’ve drawn on your high school notebook with a heart around it. 😉😉

But to reframe how you’re thinking of debt, we’re talking about GOOD debt today. 

Good debt is considered an investment because it’s used to finance something that will increase in value and produce more income – AKA multifamily apartment buildings. 

To put it in perspective, the type of debt that doesn’t help grow your wealth is the debt that comes from spending to simply consume. There’s no reward on that type of debt, because it’s not giving you money back in the future…it’s just gone. You have to pay it off with high-interest rates, which can drain any potential income you’re producing. 

To make a big investment, good debt is a necessary part of the process. 💋

Then, it gets even better when you can leverage your debt to help pay off your loans and produce more income. 🙌

Check it out…

In 🏢 multifamily apartment investing, we are constantly leveraging good debt to increase our ROI. You see, apartment buildings have a lot of tenants, and every single one of them end up helping us pay back the mortgage by giving us rent. 

It’s awesome! 

The thing is, that the type of loan we use matters. If we’re strapped into a mortgage loan with sky-high interest rates (which are everywhere right now), way too much of our property’s income goes back to the bank. We prefer more of it to go to our pockets of us and our amazing investors. 

So, low-interest rate loans give the best leveraging abilities in multifamily investments. The problem is, that they tend to be hard to come by these days. 

Enter: HUD loans. 

Although they can be misunderstood, HUD loans present a magical means for leveraging good debt to grow wealth – especially in multifamily investment deals. 🤩

The beautiful benefits of HUD loans

HUD loans have lots of really great qualities, making them standouts for financing large investment deals. As we mentioned earlier, we’re in a time of crazy high interest rates in the real estate market. 

Let’s look at the best benefits of HUD loans, and how they offset the effects of high-interest rates. 

✔️ HUD loans have longer amortization periods

The amortization period refers to the length of time it takes a borrower to pay back a mortgage loan in full. When a loan has a longer amortization period, that means the regular payments can stay low – keeping more cash coming in with less going out. More cash flow is allllways a positive, making HUD loans a shining option for multifamily investment funding. 

✔️ HUD loans offer fixed rates

Imagine getting started with a loan that’s perfect for your needs, and then being hit with a big increase in dues later on. 

What a bummer, right??

Well, in the current economic climate, HUD loans are among the very few options for fixed-rate financing for new construction investment properties. With up to 40 year, fixed-rate periods, HUD loans are kind of like the unicorns of real estate investing loans. 

✔️ HUD loans are considered non-recourse debt

Non-recourse debt means only specified assets can be used as collateral for the loan repayment. Usually, collateral is the property being purchased – which makes sense. The alternative to non-recourse debt is when other assets that are owned by the borrower can be seized throughout the course of the loan. To keep any other investment properties you own safe, non-recourse HUD loans are a truly solid choice.  

✔️ HUD loans can be fully assumable

A loan that is fully assumable allows investors to take over the loan of the previous owner. By transferring the loan that was already established for a property, you can take advantage of the lower interest rates that were set a long time ago. It’s a bit like traveling back in time to when interest rates were low and applying them to the high-earning potential of today’s market. 

Like we said…HUD loans have magical qualities.

Why HUD loans are the real estate unicorns 🦄 of today’s economic climate

Now, you’re probably wondering why HUD loans aren’t the biggest talk of the town for real estate investors. If they really are so great, why isn’t everyone using them? 

Great question. 

👉 HUD stands for the Department of Housing and Urban Development and is usually associated with funding low-income housing developments.

So, it’s not like HUD loans are just laying around waiting for multifamily apartment investors to come and pick them up. If they were, eeeeveryone would be taking advantage of their investment benefits. 

To really access the power of HUD loans, it takes a bit more knowledge and effort. But, if you can find a multifamily property that was developed with a HUD loan, it might be possible to assume the loan as a purchasing investor.

You’d be harnessing the benefits of low-income housing terms, but using them to finance a property that has the potential to go way up in value. 

THAT, friends, is how to leverage HUD loans to lower your risk and increase returns in multifamily apartment investing. 😏👌 

As you can imagine, it’s tricky to find HUD loans in the current economic landscape of the real estate market. The potential of high-return properties becomes less enticing when high-interest rates are making investments riskier. 

But if you know where to look, you can absolutely secure a 🦄 unicorn HUD loan with low interest, fixed rates, long amortization, non-recourse, and assumable terms. 

Here’s the best news yet…we know exactly where to look, and we can help you secure the right loan to fund your future through multifamily apartment investing. Why go it alone, when you can leverage the knowledge and experience of others to lower your risk and increase your possibilities for investment success? 

Let’s finance your dreams together. 🥰🥰

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We're Palmy ➕ Nancy Kitti 〰️ The Kitti Sisters

A sister duo team obsessed with all things financial freedom, passive income, and apartment investing + apartment syndication, who turned a $2,000 bank account into a nine-figure empire.  Now, we're sharing with you the behind-the-scenes secrets of our wealth building strategy.

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