I am looking for a hard money lender that will give a check outright. I am in Houston, Tx and so is the property. The hard money lenders that I have contacted have stated that I would have to do a “draw” on the money. I know there is another way. I have not stopped looking, I just thought that someone on this board may have already crossed this bridge.
thanx in advance
Typically you won’t be able to get a lump sum if you’re basing the loan on the arv. The only way for the lender to assure themselves that the property will reach the desired value is to control the rehab funds.
If you own the property and want to get a lump sum this may be possible.
Also, if you’re buying low enough and base the loan on the as-is value, you may be able to get some cash out.
Does the hard money loan cover the cost of the property as well or just the rehab?
Sometimes a lender will just give you like up to 60-65% of the as-is value.
This can go to cover the purchase and the rest cash to the investor.
For example:
As-is $100,000 x 60% = $60,000 loan
Purchase = $45,000
Cash back = close to $15,000 minus costs
I have so many other questions:
Who determines the as is value? Is this the asking price or what?
Would I be looking at two separate hard money loans? one for purchase, and one for rehab?
What if I don’t have the money to get started with the rehab (payback for rehab work already done); concerning the draws
A subject to appraisal determines the final ARV in most cases—a typical hard money rehab loan would include the cost of purchase + repairs + closing costs and some cases the actual mortgage payments—if you don’t have the money to fund the rehab before being reimbursed, you could; 1) leverage an existing property (HELOC, etc.), 2) Partner up with somebody that has the liquidity.
Regards,
Scott Miller