Short Term Hard Money Loan

4 Replies

I will make this as short as possible. 

My fiance and I have been paying for my grandmother's home in Encino, CA for quite a while now, he the last 2 years, and I have been paying down her mortgage since 2008. As of right now, her home is worth $1.7 million and her loan balance is $180,000. She is getting older and had a stroke 2 years ago. Since we have been paying for and maintaining her home, and no one else in my family can afford the home, we have actually been asked to purchase it by my family. With my credit and also a situation I am going through with my home in Las Vegas, which I have already been getting help with through this forum, my fiance is the one buying the home and getting the loan. He has an excellent credit rating and a great steady income. The problem we ran into is the gift of equity is only available to family and that is what we were planning on using for the down payment. We are not getting married until 9/13/15 and like I said, with my situation, I am not going to be on this loan until I get my mess straightened out. 

The down payment for the loan is $127,000. Because we take care of my grandmother and the house, we are getting the difference of the $180,000 and the $508,000 purchase price back immediately after close so we would be paying the hard money back within 60 days. 

Are there any hard money lenders on here that might be interested, how much would the money cost us, OR does anyone have any better ideas? Between the two of us we have around $75K invested, but we would rather not touch that money unless absolutely necessary, because we would have to liquidate and overall it seems a hard money loan, depending on how much it costs us, would actually end up saving us money as opposed to cashing out our investments and then reinvesting in 60 days. 

I would love to hear thoughts from seasoned investors and any lenders. If you need anything clarified please ask. Thanks.

What will your plans be for the home assuming you buy it?  Hard money will cost anywhere from 12%-18% depending on who makes you the loan and that is a high loan but if the equity is there like you stated you should be able to find someone to loan you the funds. 

Good luck

Medium buymemphisnow stacksCurt Davis, Buy Memphis Now | [email protected] | 605‑310‑7929 | http://www.BuyMemphisNow.com

We are buying it, that isn't a question, the question is what route we go to get the down payment. I would rather not run out and get married to get the gift of equity, especially with all of the planning and everything that has already gone into our wedding. 

Our plan is to keep it. We live there half of the year now and have put between $300,000 - $400,000 into it over the last few years between paying the mortgage, taxes, insurance and all the repairs. Is that 12%-18% a month or total? $15,000 total while not ideal for 60 days is not that bad, but $30,000 for 60 days would be a no go. Another thought I had, is if we had my grandmother sign something showing that money was paid in, maybe like post dating a lease to purchase option, but I don't know if they would consider that suitable for a down. Thanks for your fast response. 

Look for a portfolio lender in your area. I have actually had clients in the same situation and there is an easy way around it without doing hard money. I can't do it in your area, but get a hold of me and I will tell you how we did it and I can tell you where to start.

Originally posted by @Teri Elmendorf:

We are buying it, that isn't a question, the question is what route we go to get the down payment. I would rather not run out and get married to get the gift of equity, especially with all of the planning and everything that has already gone into our wedding. 

Our plan is to keep it. We live there half of the year now and have put between $300,000 - $400,000 into it over the last few years between paying the mortgage, taxes, insurance and all the repairs. Is that 12%-18% a month or total? $15,000 total while not ideal for 60 days is not that bad, but $30,000 for 60 days would be a no go. Another thought I had, is if we had my grandmother sign something showing that money was paid in, maybe like post dating a lease to purchase option, but I don't know if they would consider that suitable for a down. Thanks for your fast response. 

 Hi Teri!

I'm still new to real estate but my understanding is that hard money lenders charge you a annual interest rate in addition to "Points" if you are really truly able to pay this off quickly the main obstacle for these types of loans will likely be the points. I encourage you to look into this and ask the more senior members if you have questions about these kinds of transactions!