Here's another tip for working with hard money lenders.
Follow the submission guidelines the lender has put in place. Give the lender a complete submission using the guidelines but don’t go overboard with the information. Don’t submit more information than is initially requested.
Hard money lenders want to consider a specific loan opportunity. Hard money lenders do not want to consider nor have time to look at random “what-ifs”.
Additional information is often in the way of being able to consider the facts of the loan request. Submitting too much information before the information is requested is a common mistake. A lender will ask for more information if it is needed.
Do you have hard money loan questions or tips?
I'm a currently searching for hard money. I have completed 3 deals, 2 of them being complete gut rehabs. I am still relatively inexperienced so how much skin in the game will a typical hard money lender require for a loan?
Great post @Account Closed
3 deals is a pretty solid start to building a successful track record and this will certainly help you qualify with most lenders. As a rule of thumb, most HML want you in for 10-20% of the purchase price. Factor in another 5-7% for closing costs depending on the origination fees. Further, if you're financing the rehab work, most HML will escrow those funds and release once work is complete. So you'll need another $10-20K in reserves to advance to your contractors, pay monthly interest, utilities, taxes, etc.
PM me if you want to discuss further. Happy to jump on a call with you.
The amount of skin you'll need in the game can vary greatly from lender to lender and deal to deal. There are some great hard money loan calculators out there which can be used to estimate your total costs/etc. Your total costs minus your loan amount will often times equal the amount of cash you'll need to bring to closing. However, that's not always the case, so I always advise my potential borrowers to have at least several thousand dollars available to put down at closing.
Feel free to message me privately for links calculator and info.
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