How do you pay back a hard money lender?

Question

Can someone help me with different ideas on how to pay back a hard money lender? Thank you.

Jason Shackleton · Answer

Hey @Roberto Vasquez hard money loans are used mostly when purchasing a property that is deeply discounted or to secure a deal quickly when you do not have enough time to get a traditional mortgage. In terms of how to pay it off, this usually happens once you have completed your renovation and reached your ARV number. At this point you can pay off the hard money loan with a traditional loan by refinancing the property. Or you may choose to sell the property and pay the hard money loan off with the proceeds from the sale.

Account Closed · Answer

I couldn't figure out your original question and am surprised you would ask how to earn the money to pay back a hard money loan before you already had some sort of investment planned.

Hard money loans are very expensive and they usually come with some high upfront origination costs and their interest rates are high and their penalties are high. Hard money loans are nothing a real estate amateur should get involved with because even many experienced and professional real estate investors and house flippers make huge mistakes and lose money.

Hard money lenders most-likely will not loan you money, if you don't have extensive real estate experience, even if you present what you think is a super great and profitable deal, because while hard money lenders will loan whatever percent it is of the after repair value of a property the hard money lenders don't really want to have to take your property away from you and get into the real state business.

Account Closed · Answer

You didn't write any details about why you are asking. My short and quick answer is; write the hard money lender a a check, but I am assuming you are short on cash, behind on your payments and you are expecting that Benny The Bone Breaker will be catching up with you, soon.

Roberto Vasquez · Answer

@Travis Steinemann thank you…I’ve been doing the numbers, and numbers wise it’s been working, I guess I just needed that extra push, after placing like idk how many offers on this crazy market I finally got one accepted, thank you

Travis Steinemann · Answer

@Roberto Vasquez if you want a rental, make sure you run your numbers at 70% of ARV minus repair costs minus financing costs. Then you should be able to buy with hard money, repair it, then get all the money back out to pay back the lender. Keep some money in reserves because they often (usually) require monthly interest payments.

Jeffrey Abraham · Answer

There is a whole bunch of different programs that you can get out there I said the wrong thing was supposed to be 20% down that's what a lot of lenders offer when you are purchasing a rental property

Steven D Martin · Answer

@Jeffrey Abraham

80% down?? Is this like a private money loan?? Or just a type-o? Lol...

Roberto Vasquez · Answer

I'm understanding better now. Thank you.

Roberto Vasquez · Answer

Only 80% down?

How do you pay back a hard money lender?

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