Need information on HML. Do I have to deal with one that is only in Kentucky, or are there others in the states that can do this.
I am new to this idea of using this type of financing.
Any information will be helpful.
What are your financing goals?
Hard money question? ask a hard money lender.Oh! I 'm a hard money lender :o
There are many multi-state lenders. No reason one must be in KY.
Grinch,
No, you do not need to use a hard money lender that is located in KY.
There are only a couple lenders out there that truly function as a hard money rehab lender and make loans in KY.
One of them that I know of does a loan at 70% of the after repaired value. The loan can cover cost, payments, fix up, and purchase price.
Tell us a little about why you feel hard money is the type of loan you need. There are rehab loans through banks or lenders that we normally use as brokers.
Where is this lender located at in KY? I too am interested in getting my financing “lined up” before closing any contracts. I will be looking to rehab houses in the southern KY area. Any info is greatly appreciated.
Most rehab lender will do 65 to 80 ARV (After Repair Value)
Here is the calculation:
Offer= (ARV x 75%) - (Repairs + Holding + Closing cost)
Note: if you want low closing or no closing cost will require higher rate.
440,000(ARV) X 75%= 340,000 .
Total cost 40,000
340,000 - 40,000 = 300,000 Offer
Some lender max at 80% due to borrower cash. If you had gotten a higher % of ARV, you would not have to put the cash. That is leverage. Keep your money in reserve. I would keep just as emergency to cover my ass if the property will not move. Pad the repair alittle.You pull the wall, suddenly you have water damage behind the wall.
440,000 -370,000 = $ 70,000 profit- Ok
- Purchase property .Take loan out to do remodel. Harder to do some lender require seasoning of title.
2.) Rehab loan
3.) Purchase option. Locate your buyer first. Do this before looking for property.
Johnny Q
Will lenders lend rehab loans based on the equity of the deal? I have a hard time believing that even with bad credit, a lender will turn down a deal with potential 30-40% equity? I am ready to make the leap into REI but am weary of the potential of not obtaining financing.
Yes, they will. Most require 620 or above. Some even to Fico 550 with a co-signer.They also wants experince too. Hard money comes to play for the equity part, in some case . Will have 2,000 and 3,000 private investors coming on board and growing nationwide.
You should be weary. Most people are afraid of the known, that is why they do not take action.You need someone who is a professional to inform you every step of the way and cover your back.That is why I get so many referrals and request. Never assume, verify the info.Have your ducks in order.I see solutions, not problems. Every one is focus on the problem and cherry pick. Do what others people are afraid to do and you will be wanted and successful.
In your experiences did your lending sources give you verbal backing before you closed deals? Or is this entirely unheard of?
I never take verbal.
Have you run across difficulties finding lenders after signing the contract?
Put the horse first and carriage 2nd. Get your lenders line up.Plan for the unexpected. Think out side the box.
thx
Soky,
Most HML will be able to get you a preapproval based upon your own merits and not the spefic property. An initial application is taken along with a credit review. In your case, good scores, so that wont be an issue. There are lenders that will work with scores even below 500.
The next step would be then finding the property. Once you have located the property the lender would need the contract, scope of work, 3 comps, exit strategy, and bio.
As long as everything fits within the 70% formula, there should not be a problem. Lender will deduct points, 1st 4 payments, and costs of of the loan upfront. Appraisal is generally the only out of pocket cost.
I work with one HML that does not care what the credit looks like at all, but they do want to see the borrower put equity into the deal, but they only do commercial, is there one anyone knows of that would do a residential fix flip rental?