Hard Money Loans
Can you get hard money loans on properties that you own free and clear...maybe even with a tenants in them and use the properties as collateral?
Maybe. But hard money is expensive and very short term. Its not usually something you use on existing properties. Better to just get a conventional or commercial loan on an existing property. You'll get a MUCH better rate and a long term.
Now, if you have something you're trying to buy, HMLs will sometimes do cross collaterization using an existing property. That can help reduce your out of pocket cost on a new acquisition.
Ok great Jon...I will look into it!
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#2 Questions About BiggerPockets & Official Site Announcements Contributor
- Investor
- Maui, HI
Hey @Jonathan Plair Welcome! Definitely start jumping into the community here! Be sure to read through The Ultimate Beginner's Guide to Real Estate Investing to help you get started.
Finally -be sure to setup some keyword alerts - especially for "Detroit" so you can jump into local conversations.
See you around the forums!
Greetings,
Does every investor sign up for a membership with hard money lenders in order to get funded and get proof of funds letters?...or are you able to get those things without a membership?
The HMLs I'm aware of don't have any "memebership". They're lenders, not unlike a bank. You fill out a standard mortgage app, provide a bunch of doc about you and the project and you get approved or denied.
Proof of funds makes me think you're trying to write cash offers. Hard money is not cash. Its a loan. Write the offer as financed and include the pre-approval letter from the HML.
Originally posted by @Jonathan Plair:
Greetings,
Does every investor sign up for a membership with hard money lenders in order to get funded and get proof of funds letters?...or are you able to get those things without a membership?
This might be location dependent, but I've never heard of a membership before. In general, I avoid any lender/broker that wants money up front that isn't fully refundable and being allocated to closing costs (appraisal, fees, etc.). I've used an HML many times and have never had to give any money up front.
How much are the "membership" fees you're being asked to pay up front?
I'm in Michigan and it seems like the lender is asking for a membership in order to give me a proof of funds letter...and the real estate agent is telling me the bank needs a proof of funds letter before I am even able to put it under contract
In my experience(very limited) the HMLs that ask for a membership are not worth your time. They want to put you in an "inner circle" sometimes for lots of money...
If I were you i'd look for another source of funds and I would tell your HML that's what your doing. If they don't want to budge then I would get away from them.
You can usually, but it's very expensive. If you own it free and clear it would better to go to a traditional bank.
@ Michael Kiekerka...the membership fee is 270 and lasts for 2 years...that or they are asking me to bring 7000 to the table...I believe it is because I'm in Michigan...trying to see if that is common
I thought that being hard money it was predicated on the property and not really what I bring to the table..I know I may be wrong
But if that is the case and I need to seek out other options...what is the best route to go?