Hard Money: Does investors Out of Pocket Costs go towards the Loan Amount?

Financing, Hard Money Lenders, Private Money
1

Lets say a hard money lender was willing to loan 70% of the ARV. Usually hard money lenders require the investor comes to the table with half the rehab or more. My question is does the investors out of pocket amount go towards the loan amount?

So with a hypothetical subject property
ARV: $130,000
Repair: $20,000

Loan Amount @ 70% of the ARV would = $91,000
Out of pocket for the investor = half the rehab = $10,000

Does this $10,000 out of pocket from the investor reduce the loan amount to $81,000? I ask because if the out of pocket money goes towards the loan amount it will save the investor money on points and interest.

Thanks everyone!

2

hard money lenders I have worked with will loan me 70% of ARV,i have to come to the table with closing cost,

if the ARV is $100k, your buying for $50k and have $20k in rehab,you would only be out the closing cost

3

Andy is exactly correct, 70% of ARV OR 100% of cost (purchase and rehab) is the norm. Closing costs are all we require the borrower to pay if purchase and rehab is 70% of ARV.

Chris Jameson

4

Chris,

Funny, I’m actually a customer of yours, a happy customer (in Dallas not in Central Texas)

andy

5

Good to hear Andy!

I love coming on here when I’m not too busy. It’s been a while, but today was a slow day for me. I hope to hear that you are a continually happy and satisfied customer! Otherwise I’ll have to fly up to Dallas and and have a sit down with Chris F, Merrill, and Mike!

Happy investing!