If I find a property which is being sold for 30 percent below appraised value what are the best ways to finance this deal? Is it possible to do a no money down deal with a hard money lender? Should a downpayment still be needed? what would you guys do?
Depends what your goals are with the property. If you need funds to rehab then this may be a good option. You may be able to qualify for a conventional rehab loan through the normal lenders us brokers use. There is also the possibility your local bank’s commercial division can do it.
Since hard money is short term you would have to refi using a conventional lender once the work was completed. Most the time a hard money lender can structure it so that the loan covers the costs, payments, fix up money, and sales price. Basically getting in with no money down. Some money for rehab work or a flexible contractor would be needed up front and reimbursed quickly as work moves along.
If you’re finding properties below market value that dont need to be rehabbed then a conventional loan of 100% may work better if you can qualify. The out of pocket costs can be reduced by having the seller pick up part of the closing costs.
It would be best to speak to a mortgage consultant so they can ask you all the appropiate questions to determine what type of financing is available to you.
The use of a private lending resource for short term (1-12 month) purchase/Rehab or Fix 'n Flip loans is typically used when dealing with a seller who is in a “distressed” time-sensitive situation which requires a really fast underwriting and Closing process.
In those circumstances, most banks and virtually all conventional lenders are “out of the game” because their average processing and closing timeframes are around 4-6 weeks vs. the 5-7 business days
required by a well-tuned Private Lender.
Once you have acquired the property, you then have plenty of time in which to secure perm financing if you intend to retain the property for rental income.
In addition, many investors seeking to purchase and “Flip” within a few weeks prefer to use a private lender in order to avoid all of the documentation that banks and conventional lenders require.
I am new to Real Estate Investing business. Can you recommend some hard money lenders that are competitive in thier rates ? Is there any website that compares
what they offer ?
Many HML will only go up to 65% LTV. Some HML want some money down and they are doing credit checks as well. They can get it done quick.