Hard Money... What Cash Do I Need?

Financing, Hard Money Lenders, Private Money
1

I have been wholesaling. Finding motivated sellers and making offers. My offers have been getting accepted and i have been assigning these contracts to rehab investors.

Although i want to do some rehabs as well. I have never delt with a hard money lender. Would like to know the usual process in dealing with a HML? Also, what monies do they normally expect from you on your first deal with them?

Thanks a Million!
Sean G

2

Sean,
most hard money lenders will loan between 65-70% LTV or up to 70% ARV-After Repair Value for terms up to 12 months (some even 18 months). Some charge extension fees and some don’t when it applies (if more time to pay off the loan is needed). Origination fees (or points) vary depending on the lender; some charge nothing some charge up to 5% of loan. They will require an appraisal less than six months old or a new one altogether.

You will also need to provide a list of at least 3 other properties in the same neighborhood which are comparable in size and price & a repair checklist if the property is a rehab, and whatever additional criteria the lender requires from you. Most lenders won’t even consider doing a loan that isn’t a minimum ARV/after repair value of at least $70K. Some lenders lend based on your credit score (most want a 680) or above; some don’t require a credit score since they are “asset based” (based on your assets/collateral if you will). Hope this helps.

Sincerely,
novice_investor

3

Thanks! Yes, that did help and confirm alot of what i have heard from other investors.

Although, do they require you to provide repair cost and closing cost at closing?

4

The loan usually consists of the purchase price plus the money for repairs.

5

My question is basically the same as the one first asked. It wasn’t really answered clearly, so I’ll try again:

What money do you have to provide at the close of a hard money loan?

I’m trying to get started with investing in rehabs, and I’ve talked to a bunch of traditional mortgage lenders and some mortgage brokers about “rehab” loans and I can’t seem to find one that requires anything less than 10% down (of purchase price plus repair costs) and 4-6 months of PITI reserve. I don’t have that kind of cash. How “cheap” is it to get a HML? Will I have to pony up 10% down plus closing costs?

6

I’m interesting finding out more about HML too. I’ve already closed on my property and need about $75-100k to complete the renovation. Once done, I should be able to make a min. $50k profit. Is this a scenario for a HML? And if so, how do I find one?
BTW, i’m in the ATL too.
Thanks!