Newbie about to embark....need advice

Financing, Hard Money Lenders, Private Money
1

This is the best board on this subject I have yet found, great advice on here. I have been researching flipping very aggressively and I am bout ready to take the dive. My questions are a few, that only people with experience may answer. So, I hope I find on here very helpful tips. Also, I live in nyc, and have a credit score of 712, and I have a decent job, I added that as some background info on me. Here are my questions:

  1. Which loans are better, or more advantageous, Hard money, or traditional? And why?
  2. Also, would it be to my advantage to form an LLC, as far as loans go? Would it be easier to aquire them? What are downfalls of LLC’s?
  3. I plan to borrow from the bank the rehab money, or from a lender, and plan on using professional contractors to finish the job, with the home on the market at 250,000, and comps around the area selling at around 385k-423k, do you think it’s a good way to handle it with contractors.
  4. For now, I ahe ran out of questions…olol…but any other advice wold be GREATLY appreciated.
2

  1. Traditional is better unless you need to move quickly or can’t qualify for a traditional loan. HML will typically be at 12-18% interest rate and will charge substantial up front points (I have seen 5 points in many cases)

  2. As far as loans go, it would not help to form an LLC. This would help you for legal reasons. If you buy int he name of the LLC, it would be considered a commercial loan and would probably require at least 20% down. Also, the terms wouldn’t be as good. You may also still be required to personally guarantee the loan. If you buy personally and want the LLC to own the property for legal and liability reasons, you can transfer the deed after closing into the name of the LLC.

  3. You can finance rehab using contractors.