Sometime ago I believe I read on the forums that there where hard money lenders out there that did not look at anything but what you where buying. If if had some equity in it they would give you the money reguardless of credit, or income.
Does anyone know of a lender like this?
antstefani,
Let me know if none of the lenders on this site email you a contact. I’ll send you my HML contact info through an email, she has a variety of lenders that go by different criteria. She may even have one that doesn’t pull a report or care about income.
Most Hard Money Lenders are not credit driven.
No reserves requirement, but you must show an ability to pay.
Most max at 70% LTV with Seller carry 2nd’s allowed to 90%.
You can also purchase a property with 30% equity for no money, not including closing costs.
Be weary of a Lender, Conventional or Private, that require No Doc deals. You will pay in rate and in Pre-Payment penalties.
The market has changed for Investors
So how do you make sure you’re getting the best hard money deal? What are reasonable terms now days?
I don’t really care too much what the rates are because whether the rate is 12% or 16% I’m still going to refinance right away. Refinance as soon as the property is rehabed or if it is just a great deal then refy a month or so later. I like HMLs that will allow you to roll in closing costs, repairs and do a no money down loan.
Terms depend on the deal and your credit but 12-16% is typical with around 6% in closing costs.
Thanks Iron Range,
DO you use a local hard money lender or do you use someone out of state?
I don’t use a local HML. The only down side to using an out of state HML is that you may have to fly the hard money investor in to see the property.
You will want to call 20+ lenders until you find one that you feel can get the job done that you need done. You will know you found a good lender when you have nothing to your name, but find the lender will lend you 1 million dollars with no money down, roll the closing costs into the loan, and roll the first six months of mortgage pmts into the loan.
After you find the lender then the really difficult task of finding a great apartment building is your next mission. This will be the most difficult part of the process.
The best way to find good hard money lenders is word of mouth referrals. Find the investors who use hard money frequently and talk to them about the local lenders they use.
You should be able to find other experienced investors, as well as local hard money lenders through your local Real Estate Investors Group.
In general hard money doesn’t look at credit score, income or assets, but only at the property being collateralized. There has to be enough equity in the property to provide security for the lender in the event that the borrower defaults. And good lenders hope you DON’T default. They want you to make money and come back and do another deal.
Rates in my area range from 12-18% and 2-6 points. If it’s a short term deal, like a rehab, the rate shouldn’t matter and should be built into the deal when you are making offers.
Watch out for lenders who lend with the purpose of taking your property. Try to find lenders who lend to make money on points and interest, not on taking your property. You should be able to ask a lender or broker for references from other happy customers. It doesn’t take long in the hard money community for word to get around if a lender is predatory. So ask around.
I agree with what Amy is saying. I have spoken with a couple of hard money lenders and they have said “we hope that the customer defaults on the loan because then it saves us the time of having to go out and look for properties and business ourselves.” Investors have to keep in mind that for the HML’s it is a business as well. Would they rather make 3 points on a 60K loan ($1800) plus six months of interest at 135 ($3900) or just wait six months and acquire a property worth 85K that has already been rehabbed and and is ready to go. Now I am not judging HML’s or saying what they are doing is wrong because they are risking their money as well. All I am saying is do your research and your homework before entering into a business transaction financial or not.