Lessons learned with a hard money lender
I have been buying with cash and rehabbing properties. That is obviously a cash intensive strategy, so I looked into hard money. I found what I thought would be a good solution. I used Lending Home. My rep was very positive and professional and the web interface is clean and easy to use.
Here's what went wrong. Because I do my own work, my rehab costs basically just include materials. This was a red flag with underwriting, as the budget seemed low. They told me that if I wanted the loan to go through I had to increase my rehab budget. I increased the rehab budget and they came back and told me that the LTV wouldn't work because the rehab budget was too high.
Sigh. This would have been a good win for them and myself. Now of course I'm in a cash crunch. I expected the loan to close this week but instead I'm scrambling for a solution.
For those looking to use hard money, make sure you do your homework ahead of time and don't count your chickens until they hatch. Lessons learned.....
Most Popular Reply
I would say, especially in these times, working off of referrals is of the highest importance. For instance, we just worked with a lender that was generally pretty good, but there were more bumps in the road given everything going on at this time. We also worked with another lender I've worked with before and things went about as smoothly as we could have hoped.