Has anyone used DoHardMoney.com?

Question

I'm looking into different funding for fix and flips in Virginia and DoHardMoney.com keeps coming up.  I looked into it and got preapproved for funds but I'm not sure how I feel about the company or their terms and conditions.  Has anyone used this company and if so how did it go, do you recommend them?  Thanks!

Kenny Lee · Answer

My pleasure @Joseph Szymczak II  Good luck and let me know if I can help more.  Will say there's folks on here who know a heckuva lot more than me, but glad I could offer you some insight.  Not too far removed from being right where you are.

Joe Szymczak II · Answer

I really appreciate your response @Kenny Lee, thank you for sharing your knowledge and experience!

Kenny Lee · Answer

Great question.....for new investors, it's often the only option and was for me too.  And yes, to answer your question generally, they are worth it and the positives outweigh the negatives.  BUT only if the deal makes sense once you figure in your HM costs the same as you would your rehab, purchase as well as any other cost associated with a flip.  I'll give you an example.....

My first deal on my own (without a partner), I had about $40-50K liquid to put toward a deal.  Found a house where the purchase/rehab/carrying all total was about $115K (70/40 plus carrying).  After analyzing the deal, I knew my HM costs would end up being 5-7K, but it was a $15-20K total profit.  Turned out I was right and the final total profit was $18K and HM costs were about $6500 of that including points, interest and fees.  So I ended up making roughly $12K, but only had to put up about 20% of the total investment.

So again, they are a great tool to use for the beginning investor and also I will use them sometimes if I want to do more than one deal at a time.  Nowadays I prefer an asset based lender who will lend on a percentage of the purchase price (usually 80-85%) if it makes sense for that particular deal.  Then I handle the rest of purchase, closing and any rehab costs myself.

Kenny Lee · Answer

Never used or heard of them, but have used a couple different HM lenders.  Shop around and compare rates and you'll get a good idea of what's good and what isn't.  And some of the terms from company to company will vary.  For example, I'll use one HM lender for deals that are rehab-heavy and a different one for ones that are more purchase price-heavy.  And they don't always have to be local either.  Then just look at each deal knowing what your approximate HM costs will be before pulling the trigger.

Ryan Pryor · Answer

@Jay Hinrichs Thanks for the information.

Jay Hinrichs · Answer

when you flipping houses yes its ordinary income and if your self employed there is some sei tax or maybe that went a way with tax reform.. but yes you get taxed at what ever rate your income is.

Ryan Pryor · Answer

@Jay Hinrichs So, during tax season you work with your accountant and than owe the IRS at normal tax rates?

Ryan E. · Answer

What's an asset based lender vs HML? I thought commercial lenders didn't lend on properties that need rehab.

Jay Hinrichs · Answer

you cannot take either of those tax treatments with flip properties its ordinary income.

Ryan Pryor · Answer

@Kenny Lee was the 12k profit before capital gains? Or did you use a 1031 exchange?

Has anyone used DoHardMoney.com?

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