BiggerPockets

Looking to chat with some investors that have been taking something similar to the approach i've had in mind. Hard Money Rehab -> Refi -> Rent-to-Own (or hold as a long term rental). Most interested in conversion about the rehab->refi part of it. Msg me![b]

Jon -

I'd love to hear about some of the questions one should get cleared up with the hard money lender.

They usually lend on ARV; what sort of questions should we ask the lender?

Points?
Terms? I've read that HML isn' t for long term - so, whats LONG really mean? Max 12 months?
Interest Rate?

I know the REFI process can be a bit of a gamble. Would it be easier to just do rate and term?

What can we do ahead of time to ensure a higher chance of a successful REFI?

Thanks in advance

@ Jon - I totally agree that it would be for the best to post here vs. chatting on messengers. It was just at the time of posting that I was looking for some live chat to bounce ideas and shed some more light. But by all means I'm more than happy to keep the topic on board here and post whatever outside info I receive so I can layout what I have in front of me for everyone to see and contribute :).

The big question I have at the moment is that I'm going to be creating an LLC this month which I plan to build this business model under. While the HML requirements are clear enough and will happily lend to the right deal I'm fairly content there. Fortunately I'm friends with Scott McLain from Red Dirt Lending so I'm working on a list of Q's to send his way for insight, I'm sure he wouldn't mind me sharing those details.

What I'm totally in the dark about is how a new LLC starting with HM converts to refinancing out into a much lower rate that lends itself to the hold and cash flow.

I presume the first thing to do after creating an LLC would be to open a business account with a bank.

1) Can new LLC's even qualify for any sort of credit line off the bat?

2) If the property is under an LLC and the plan is to refinance what are some of a the standard requirements for Refinancing under an LLC?

3) @Edwin in your business equation what % of the ARV would you expect to receive in the refinance if, for the sake of simplicity, your ARV = their BPO?

4) Now to muddy up the waters some, in your experience what kind of differentiation are you typically encountering between your ARV and their BPO. I know this is the last thing from an exact science, but any rules of thumbs or observations based on your experience would certainly be appreciated by anyone who comes across this board.

One thing i have found about good HML is that they know who is refinancing to get their money back out of a deal.

@ HML is most definitely not for long term, RDL does 6 months @ 16.9%anu.

For a refi-rate what are you guys encountering?

Hi, IMO, you also need to look for rich little old ladies that are earning 2.5% in their CDs and see if you can obtain private money for three years at a time. Many will jump at earning 6-8%. For rehabs, it's best, if you don't have your money, to use HMLS for the closings, private lenders to rehab and take out loans and refi with conventional lenders to bat clean up. Bill

FE that is a great idea! lol perhaps I should spend less time hobnobbing in after work bars and more time volunteering at retirement homes. :)

In an effort to keep this topic from going off tangent I set up another thread to cater to the brainstorming of possible settings and potential investors.

http://www.biggerpockets.com/forums/49-private-conventional-lending-discussion/topics/52312-brainstorming-ideas-for-settings-and-

Keep this one geared towards ironing out the reality of refinancing out. :)