Hard money lending question

7 Replies

Im starting to deep dive into deals, finding comps etc. Looking for triplex and quadruplex up to about 100k, I'm just starting out. I don't have a significant amount of capital saved up. but My credit is in the mid 700s. The path I want to go is BRRRR. I would need a hml or private lender. If I decide hml, is it possible/good to roll holding/closing and upfront fees in the loan? Or would it be better to just get a separate personal loan to cover that? I also know Im probably gonna need 10%-20% down depending on the lenders rates. Im very eager to get started. Im forming my map to get this real estate process started. Having 10-20k upfront seems impossible if i would have to save to get there. Im willing to leverage my credit if I know the deal is a good one. Any tips? Or experiences with little money but decent credit?

Thank you,

I am in the North Houston area and have submitted an offer on a property I’m hoping to be my 1st fix/flip. I wanted to find other hard money lenders that may 

@Roy Means you should borrow as little as possible using HM as it is very expensive and interest racks up quick. make sure you only use this for deals you can get in and out very fast. You really need to know what you're when borrowing HM. 

Fo anyone just getting started I suggest wholesaling until you can fund yourself unless you have slam dunks that will sell very quickly. 

Hard money lenders are appropriate if you are planning to BRS,  in other words, buy, renovate, and sell. You will pay higher interest on hml’s but they save you time and hassle getting approved by a traditional lender. Back in my flipping days, I had a hard money lender who would loan me money with no questions asked other than the address of the property and the amount of loan I needed. I would usually complete the renovations and resell the property within 4 months so the additional interest expense was not that significant. I just signed the loan agreement and he forwarded funds to my attorney’s escrow account. Keep in mind that with traditional mortgage financing, the closing costs can be 1.5% to 4% of the loan amount so if you are financing for a short period of time the financing costs can be higher with a traditional lender than with an hml. 

@Roy Means

You're shopping in a precarious price point.  

Most HML's want a loan amount of at least 75K. They will loan, generally, up to 80-85% of the purchase price and 100% of rehab. If you decided to buy, renovate, rent, refinance, the refinance is going to cap you at about 75% of the new appraised value, but it you get an appraisal that comes in short, you could end up eating that hard money loan and having to sell. With carrying costs and closing costs, you'll be luck to get out with any profit.

Go a little bigger if you can and make sure the end product's value will be greater than 110K so you don't get stuck with a loan amount for the end financing that's too small.

Originally posted by @Cory Riles :

I am in the North Houston area and have submitted an offer on a property I’m hoping to be my 1st fix/flip. I wanted to find other hard money lenders that may 

@Austin Pool can probably help. I used that HML where he works for my project.