I am a new inventor that I would like to get started flipping some house at my local area ( El Paso, TX). I have been educating myself thru books and webinars here at BiggerPockets, and I believe that I am ready to start with my first property.
The problem that I am having is regarding the Hard Money lenders.
For the ones that I have contacted asking for money, they have replied back saying that they lend 70% of the ARV, and they keep the house as an asset in case something goes wrong during the flipping, plus some of them want a 10% down.
- Are those normal requirements when asking for hard money?
- Also, who owns the property when initially buying the house?
Also, those anyone know any strategy on buying houses from actions using hard money? For what I know, as Hard Money lenders require an asset, and takes a few days to get the money, it is imposible to use someone's else money to buy from actions, am I right?
Does anyone know any other strategy when trying to buy properties for flipping on actions? Not asking to mentoring in any way. Maybe just pointing to source data where I can keep reading details about this.
Thanks in advance!
@Andres Valenzuela Many Hard Money Lenders lend on 75-85% of purchase price and 75-85% of rehab cost You can put down from 15%-25% downpayment on the property. You usually buy the property as an LLC and you personally gurantee the property as well. You always own the property the Lender just has a 1st lien on the property. Many auctions require a down payment and they sometimes give you a period of 1 month to pay off the balance and since HL can close quicker you usually can pay the balance before your deadline.
Do you have any DP money? If not, I don't know any HML that will take the risk. If you have some cash, make sure your numbers are right. The last thing you want to do is default. HML IS a risky business. It can pay well, but the HML must protect their cash investment.
@Andres Valenzuela you'll own the property, but the HML will have 1st lien.
HML's are key partners in order to leverage your $ to get larger deals and to close fast with 'cash'.
Also, they are another confirmation that it's a good deal, as they have an appraiser determine the current value of the home and the ARV
Get used to it if you want to flip for a living, and always talk to multiple lenders in order to get the best deal possible.
@Andres Valenzuela , I'm an active flipper in the area. Since you are relatively green you will most likely need some money into the deal to have some skin in the game. Though based on my experiences it is not uncommon to have 100% financing and remodeling costs worked into the loan. I can refer you to a few people if you are interested.-Jesse