Smyrna, GA · Member since 2018 · 2 posts · 0 votes
After listening to the 90 day challenge podcast, I'm looking to make my first deal. Find a property in the Atlanta are, ran the numbers in the calculator tools and looks like a good deal. The seller wants an all cash deal so I'm wondering would a hard money lender be the best route for this deal?
Lender · Berkeley, CA · Member since 2017 · 1k+ posts · 549 votes
8y
Depending on the % down you’ll Likely need between 25-30% in assets to take out the loan.
If you are still profiting enough based on 6-7 months with loan outstanding then you do it.
Smyrna, GA · Member since 2018 · 2 posts · 0 votes
8y
@ Daniel Rutledge Yes i have the credit to refinance. So is that the way to go if I use a hard money loan? Refinance and use the equity to pay down the hardmoney loan? Also is it a good idea to try and get seller financing for the down payment with a hard money loan? With it being my first purchase I want to and use as little of my own money.
Investor · Miami, FL · Member since 2015 · 379 posts · 330 votes
8y
Hey Christopher Daniels !
Welcome to BP. Can you elaborate why you feel this is a good deal?
What are you paying monthly on the hard money? What about the monthly payment for the seller financing? What is estimated rent? What’s your monthly cash flow? Is there enough equity to refi and pay back HML? If not, can repairs increase value to where you could refi? Can you afford repairs?
For a solid answer we need solid details. Thanks!
Vinton, IA · Member since 2018 · 17 posts · 3 votes
8y
I've seen a few sites advertising hard money loans that say that they are payment free for 6 months one says they cover down payment, closing costs, and commissions? scam?
Real Estate Agent · Atlanta, GA · Member since 2015 · 295 posts · 117 votes
8y
@Christopher Daniels I have a lender that I highly recommend, has very competitive rates and are very ethical. I am an agent in the Atlanta area and I specialize in selling off-market properties.
@Daniel Rutledge Most of the good deals are going to be all cash off market deals. When time is of the essence, you capture some value by being able to close fast. Similarly to buying houses at auction.
Lender · Berkeley, CA · Member since 2017 · 1k+ posts · 549 votes
8y
There are lenders who say "no payment for 6 months" which also might mean you must be in the loan for 6 months, and can pay off the balloon payment after 6 months upon sale.
Ultiamtely, for first timer you're looking for 15-20% down, 10-12% interest, depending on the size of loan, and location of property, and 100% rehab funds (which are rimbursed), assuming it falls under the 70% ARV.
Your fees are going to be 2.5-3.5 points, an attorney fee $700-1500, a likely underwriting fee between $750-1,000.
All told, expect to need 25-30% of the loan amount to close the loan. 15-20% toward downpayment, 5-10% toward closing costs. 5% toward interest reserves, as you'll have to begin the rehab yourself, and will be reimbursed as you complete it.
Don't pay any fees upfront, except background/credit ($25-50). And if you get your b/c run by one lender, it won't hurt you to get it run by other lenders as long as you do it within a 2-3 week period.
Lender · Hackensack, NJ · Member since 2016 · 1k+ posts · 372 votes
8y
@Christopher Daniels Most HML will offer you 75% LTV and will allow for the seller to hold an additional 5% max. Their maybe an exception out there but that is rare.
Investor · FL · Member since 2016 · 68 posts · 14 votes
8y
Good info in your reply @David Weintraub! Im a newbee with 6 propeties in 15mos. My first HML gave me 12.99 w 5pts. Now my last deal Im at 10 and 2. So its important to make sure your first deal is a decent one that has equity after rehab and the your credit is good enough to qualify into long term financing. The refi financing terms are key. Be great and take action!!!