What are the typical terms a hard money lender looks for? Is $10,000 sufficient to show hard money lender I have skin in the game? Is it okay to get a great property under contract while not exactly knowing where my funding is going to come from? I don't make a lot of money during my day job and would rather get into buy and hold but I want to do a hard money flip or two to get enough capital for a first buy and hold. Any advice would be welcomed. 

Most HMLs will have a minimum loan amounts of roughly $75K. Some have higher amounts.

HMLs will want you to have skin in the game. $10K is a good start, but depending on the lender (and your credit and experience) you will likely need to have between 10% and 35% down. And that's money down, not including loan closing costs.

By the time you have brought to closing: Lender fees, points, Title fees and pro-rata interest payment until the end of the month, then depending on the size of the loan you are probably looking at, extremely roughly ~$7K+ in closing costs alone.

Best wishes on your endeavors.

Thank you very much Benjamin, I sincerely appreciate your comments. 

@Benjamin Hurwitz I have a question for you regarding hard money. I am looking at using hard money for my next fix and flip and below is the info given on the website for one of the companies I am reviewing. When the lender says 90% Loan to Value of purchase price, does that mean I am paying 10% of purchase price? The purchase price will be $60,000.My assumption is that I am paying down (skin in the game) $6000. The ARV is $155,000. The house needs approx $40,000 in rehab. So am I right? 10% down of the $60,000 or should I be thinking more like 10% of $100,000? Also, I am pretty sure the interest rate is 10% non-annualized interest. Payments are interest only. So does that mean I am paying 10% of $94,000/12? Therefore my monthly payments are $940 and I still owe $9400.00 in interest at closing whether I use the money for 6 months or 12 months? Just want to make sure I am clear on this before I actually start reaching out to people. Thanks in advance.

Fix & Flip up to 90% LTV of purchase price + 100% of rehab.

Rental Properties as low as 5.4% with 80% Max LTV. Minimum $60K ARV.

Loans up to $2M

Originally posted by @Pamela Satcher :

@Benjamin Hurwitz I have a question for you regarding hard money. I am looking at using hard money for my next fix and flip and below is the info given on the website for one of the companies I am reviewing. When the lender says 90% Loan to Value of purchase price, does that mean I am paying 10% of purchase price? The purchase price will be $60,000.My assumption is that I am paying down (skin in the game) $6000. The ARV is $155,000. The house needs approx $40,000 in rehab. So am I right? 10% down of the $60,000 or should I be thinking more like 10% of $100,000? Also, I am pretty sure the interest rate is 10% non-annualized interest. Payments are interest only. So does that mean I am paying 10% of $94,000/12? Therefore my monthly payments are $940 and I still owe $9400.00 in interest at closing whether I use the money for 6 months or 12 months? Just want to make sure I am clear on this before I actually start reaching out to people. Thanks in advance.

Fix & Flip up to 90% LTV of purchase price + 100% of rehab.

Rental Properties as low as 5.4% with 80% Max LTV. Minimum $60K ARV.

Loans up to $2M

 Pamela, you really should inquire of the lenders in question. 

As I understand it from your question...

Yes you are apparently being offered 90% of purchase. There could be other caps as well however (LTV, RTV).

In which case, you would need $6K down plus closing costs!

If the total loan size is $100K for purchase and rehab (don't forget you will also need to factor in loan costs - where are these coming from?) then 10% interest-only is $10K per year or ~$833/month. When you exit the loan you still owe the original $100K.

But really you need to sit down and chat with the lender. Topics to chat about and preferably receive in writing include:

- Total loans size

- Fees and points and other costs both up front and at closing (and even sometimes at loan exit)

- Their Minimum loan size criteria

- Their property type and location criteria.

- Is the rehab paid in arrears at each milestone or up front?

Wishing you every success.

@Benjamin Hurwitz Thanks. That is helpful. I have the money for down payment, monthly payments, and closing costs just not the rehab. The house is bad enough that I know my bank won't finance it. I was thinking of using hard money for a couple months then refinancing with my normal conventional loan. I Just wanted to make sure I understood "LTV of purchase price" and that my down payment comes off the amount of the loan. I know I would have to pay 3-4points but was really thinking closing shouldn't be as much as it would with a normal conventional bank loan. But you are right, I should just contact them. Thanks for your insight.

Definitely be careful when you see the 90% purchase price because what I've seen is that is for buyers who are the absolute most qualified. Many HML have an experience matrix especially on Fix and Flip loans that raises LTV and decreases interest rate based on deal done....