BiggerPockets

Los Angeles Hard Money Funding Q & A

Tuesday, October 19

I get asked alot of questions so I am posting the most common ones and most common scenarios for your convenience and edification.

Are you a broker or the lender? Both, but I primarily broker the deals because I do not personally have enough funds to both loan out And invest in flips. Sometimes the funds I do have at my disposal are best utilized for a loan, and sometimes its best to use it to acquire a property for myself.

How many points? As low as 3.5. As high as 10.

How much down payment? As low as zero. As high as 35%

What's the interest rate? As low as 9%. As high as 13%.

What if I have very little or I don't have anything to put down? In that case the deal may be structured in such a way that my investor is an equity partner on the deal with you. Be prepared to give up most of the equity proceeds to make the deal worth investing in for my investor, or perhaps take a cash finder's fee upfront and move on to the next deal.

Do you do deals outside of Southern California? Yes, I can facilitate them.

What is your minimum loan amount? Typically 50k, but it can be lower. Whats most important in situations involving small loan amounts is that the average points charged do not make for as profitable a deal in terms of the time spent working on it. My advice- Be open to a flat fee that amounts to a lot of points charged.

Do you have a maximum loan amount? Yes, but it hasn't been reached yet. So if you have a large loan amount deal, just submit it.

Do you do owner occupied? Yes, though less often lately.

How long does it take to close a deal? From the time any documentation needed is received, it should not take longer than 2 weeks for funding. It could be faster depending on the strength and preparedness of the deal, but on average say 3 weeks from start to finish in most cases.

What documentation is required? Varies. Though it should be noted that the udnerwriting guidelines for a hard money loan are nowhere near the underswriting guidelines of FHA and A-paper loans.

Do I need an appraisal? Varies. Sometimes yes, sometimes no.

What if I have bad credit? Credit is not the deciding factor. You can have bad credit.

What is the maximum LTV? 80%. Varies from deal to deal. The average LTV is more like 60-70%.

Do you go off the ARV (After Repair Value)? Yes, I can but I do not always go off the ARV.

What is the maximum ARV? 80%. Varies from deal to deal.The average ARV is more like 60-70%.

I hope that answers some of your questions.

Enrique

818-915-2543

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