Because of my last post asking about the best way for financing for a beginning real estate investor , it sounds like my best solution is to find a hard money lender to finance my deals. The banks would not be willing to lend because my LLC doesn’t have a track record yet and it would be too risky for them. My question is who can help me with finding hard money lenders? I looked in the investor resources section, but I don’t see anyone in my area. I live in Philly, PA. Thanks, MIke
There is a multitude of HMLs in the Investor resources section of this website. That seems like a good place to start.
HMLs are willing to be at risk at most 75%, so expect to come into your deals with at least 25%. If that is not possible the alternative is to get institutional financing at 100%…if you don’t have the credit score, you can use a coborrower to acquire the financing.
another idea is to bring in some partners to round up the 25% you need. Remember the 75% LTV is after costs. Be sure to factor in the costs of the loan (points)and closing costs.
Best wishes for your ventures!
Actually this is a great misconception. HML loan up to 70% of the AFTER REPAIRED VALUE. This means you can borrow upto 100% of the purchase price and rehab and possibly rollin points if the deal falls under the 70% of ARV number. Check out this lisnk for more info regarding the differences between Hard Money and conventionl lenders.
http://dhlc.blogspot.com/2004/11/hard-money-loans-vs-conventional-loans.html
Do they base the financing on After Repair Value- what you think it will be or what it is before you start? Example- if you think the house will sell for $80,000 after it is repaired but you buy for $50,000 before it is repaired, what will the bank lend on?
A HML will lend based on an appraisers valuation of the After Repaired value based upon your scope of repairs.
A bank wil only lend on the current appraised value.