New..In need of advice..

Financing, Hard Money Lenders, Private Money
1

I am planning to get started in the Rehab business, and have many questions. First, here are the basics of my situation…

*Plan to start after the first of the year
*credit score mid 500’s
*Bankruptcy discharged a year ago (3 months before filing score was 720+ :()
*will have 10,000 in savings to start

  • planning on initial starting price range to be 30,000 to 40,000 (list price)

I do not plan (at least in the beginning) to purchase expensive homes to rehab, because I am operating under the assumption that with a score of mid 500’s, I won’t have the option anyway. I feel very confident when it comes to nearly every part of the rehab process, other than the financing-for obvious reasons. I am currently on the way to improving my credit score, but do not want to put off getting started. I have started researching HML as a possible means of financing. These are my questions:

  1. Are there HML that are willing to loan to someone with a credit score this low?

  2. Will they loan an amount that small to purchase a property?

I will admit that I do not know alot about HML, and know nothing about private lending. ANY advice on where to begin is VERY much appreciated!! Thanks…

very glad to have found this site

2

You can call a guy named Jay. He is HM resource. 10% down with credit scores of 430 which is awesome. I’m on my final warning with REIClub so if you like you can request the phone number. I’m sure with a mid 500 score he can get you some great options.

3

Well you could start by lerning how they operate, the terms they have, the interest rates, if they have any pre-payment penalties(some do, some dont)-I guess what I’m trying to say is do research throughly.

Here’s some basic cost info

Interest rates: 12 to 18 percent
Balloon payment: typical, usually due after 1 or 2 years
Loan position: must be a first mortgage, not second
Maximum loan-to-value ratio: anywhere from 50 percent on up to 70 percent
Points: 4 to 8

Assuming the worst rate and point structure possible, a $100,000 loan could cost as much $8,000 up front and $1,507+ a month in principal and interest payments.