Hard Money loan question?

Say for a $100,000.00 single family home what is the typical timeframe for paying back the loan? Is'nt it in the 6 month timeframe? What are the monthly payments like required by a hard money lender? Is the actual property (being bought) the only collateral required for a hard money loan?

Andy Collins

· Dallas, Texas

58 posts
50 influence

Jan 22, 05:33 PM

most hard money loans are interest only, and most I deal in are 6 months, interest paid monthly.

they will loan me 70% of the after repaired value of he home,,,so if its a home that will be worth $100k when I'm finished, and I'm paying $65, and it will cost $10k to rehab,,then they will bring $70k to closing, I will pay closing cost plus the other $5k ($65k+$10k),,they will then escrow the rehab money.

You will also have your signature on the loan, and they want you to have decent credit

Dan Krause

· Michigan

284 posts
3 awards
50 influence

Jan 22, 05:42 PM

Andy: What happens if you cant flip the property within 6 months? What if you cant satisy the terms on the one loan based on the one property?

Jon Holdman

Real Estate Investor · Wheat Ridge, Colorado

Moderator Pro

12,319 posts
15 awards
95 influence

Jan 22, 07:28 PM

Depends on the lender and your loan terms. Sometimes you can get an extension for an additional fee. But eventually, if you can't pay the loan off they're going to take the house.

Jon Holdman, Flying Phoenix LLC

Anthony Y.

Real Estate Investor · Dallas, Texas

69 posts
1 award
50 influence

Jan 22, 07:29 PM

Most lenders would offer a 3 month extension for 1 point or so if you can't flip or refi in the 6 months.

Dan Krause

· Michigan

284 posts
3 awards
50 influence

Jan 27, 09:05 AM

I am not finding many hard money lenders in Michigan online. What percentage down payment is usually required (how high will they go)? Any upfront costs?

Nathan Emmert

Multi-family Investor · South Jordan, Utah

786 posts
5 awards
78 influence

Jan 27, 10:32 AM

There was a post on this recently... seemed the norm was 4 points and 12%. Without a relationship, they'll generally go about 65% of purchase price... with a relationship they'll go 65% of ARV.

If they don't know you, expect to be paying for the rehab on your own and putting skin into the purchase. I haven't seen much on the "no money out of pocket" type stuff without a solid track history and relationship with the lender.

Ann Bellamy

Hard Money Lender · Tyngsborough, Massachusetts

Pro Basic

414 posts
5 awards
79 influence

Jan 28, 04:46 AM

@Dan Krause, rates and terms vary by location and by lender. So you'll need to find local hard money people to really understand what your terms will be.

@Nathan Emmert is right about the relationship - if you have worked with a lender before and have delivered, you will have an easier time. Very seldom does a lender provide 100% of the purchase and rehab, even if the total of purchase and rehab is less than 60% of the ARV. You need skin in the game if you don't have a solid history and relationship.

Jeff S

Private Money Lender · Los Angeles, California

278 posts
8 awards
63 influence

Jan 28, 01:32 PM

Lending terms are so local @Dan Krause, that any out of town answer will not be representative and could likely confuse you. An average over many cities across the country won't help you either. There are at least two places to find hard money lenders in your area.

The first, and obvious, is a local real estate club. You can often find local REI clubs at meetup.com. Attend one and you'll likely get recommendations to others. (Or, start your own if you see a need!!) There might be some private lenders or flippers at these meetings that can give you specific advice. State your wants and needs if they allow these at the meeting, too.

Another option is Scotsman Guide. This is both an online and printed magazine directed to loan originators. You can do a search at their website for all sorts of lenders.

Jeff