Any success stories with Hard Money Lenders?

Question

Hey BP,

I am looking to purchase my first out of state property soon.

I am looking to potentially use a hard money lender for my first property even though I know it will eat up my profits.

Would you guys suggest I use a hard money lender? Or should I attempt to acquire funding through friends and family members?

Does anyone have a success story using a hard money lender for their first investment property?

Account Closed · Answer

@Daniel Mendez

The lender will order an appraisal (which you'll pay for in your closing costs). Once the appraisal comes back, the lender will then offer 75% (or whatever their % is) of the value.

Trust me, know your ARV ahead of time. A low appraisal can really screw you!

Jay Hinrichs · Answer

If your looking to BRRR with HM that's doable  that was the core of my business pre 08.

But one thing you must do before anything is get pre qualified for your refi.. don't want to get stuck in a HML with no way to refi out..

So for BRRR with HML

1. qualified for take out and I mean fully qualified not just a pre approval letter.

2. find market were you can be all in at 75% of ARV.

3. get a 75% arv loan  refi out most of your cash.

in some instances all your cash.. but then U also are mortgaged so careful with debt management

Account Closed · Answer

@Daniel Mendez

For the ARV, my experience is that you can get a general idea if you really know the neighborhoodswell and are paying close attention to what sale prices are. That said, a realtor is best because they can run comps for you as well as give you other valuable feedback.

As far as your HML question, I unfortunately can't answer since I've never used a HML.

Daniel Mendez · Answer

Cj, can I do my own research and find out the ARV of a home? Or do I need to rely on a real estate agent to do that for me?

Also, should I get a preapproval before going to a hard money lender?

Daniel Mendez · Answer

I appreciate the advice, Joel.

I think Hard Money will be my way to go if I don't find any private funding.

Daniel Mendez · Answer

When I get a 75% ARV loan do I ask lender that I want to get a cash-out refi for a certain amount? Or do I find the lender and ask that I want to get qualified for the most money?

Joel Thompson · Answer

@Daniel Mendez using OPM (whether hard, private, etc.) is feasible for a first time purchase, you simply need to make sure that you factor holding costs in to your calculations.

I work with new investors on projects in Washington & Oregon regularly, and a good hard money lender will want the investor to be successful. We see success on the regular.

If you have people in your network that are willing to fund your purchase, that would be my recommendation. Usually terms are more favorable and its less expensive. That said, you can definitely be successful using hard money.

Any success stories with Hard Money Lenders?

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