I have a question about Hard Money lending to all the rehabbers. How often, if at all, is it to maintain 100% financing after recieving the loan of 65% or the 70% ARV?
Do you sometimes run over the loan amount and have to use your own money?
I only ask because I hear you can get 100% financing all the time and wanted to know what your experiences are with this type on loan.
Don't know where you're hearing "all the time" that you can get 100% financing, but its the exception, not the rule. If purchase plus rehab is 70% of ARV, and the HML will lend you 70% of ARV you will need to come up with about 15% of ARV to cover the up front costs, closing costs, points, payments, and holding costs.
Typically we are into a deal for under 7K at 70% ARV.
We usually successfully refinance at 75% LTV with no cash out of pocket. About 15-25% of the time we may have more cash to come up with because the appraisal didn't come in right or there was a cost overrun.
You have to be prepared for this possibility.
100% financing is very possible and we have achieved it a number of times. 65% ARV allows you to cover closing costs inside of the hard-money loan. Some hard money lenders want you to have at least 2K to 3K into the deal, regardless (if you're a newbie).
Strong credit and some reserves helps tremendously with negotiation for the hard money loan.
Thanks guys, I appreciate it
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