First Investment Property!
Hey Y'all. I am @KountryNotary. I am making the transition from a Mobile Notary into Real Estate Investing. I have a great deal of experience with Real Estate Documents, strong knowledge of my local market in Southeast Texas, and enough cash saved up for my first purchase down payment. I am going to use a Hard Money Lender for my first deal and I am concerned about over paying fees.
Any advice from the Forum on how to find a Lender that doesn't charge excessive fees?
#1 Creative Real Estate Financing Contributor
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- Austin, TX
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#1 Creative Real Estate Financing Contributor
- Lender
- Austin, TX
Quote from @Danna Gallow:
Hey Y'all. I am @KountryNotary. I am making the transition from a Mobile Notary into Real Estate Investing. I have a great deal of experience with Real Estate Documents, strong knowledge of my local market in Southeast Texas, and enough cash saved up for my first purchase down payment. I am going to use a Hard Money Lender for my first deal and I am concerned about over paying fees.
Any advice from the Forum on how to find a Lender that doesn't charge excessive fees?
Hi Danna - I'm a lender in Austin (we do a lot of deals in Southeast Texas), our fees are typically 2-3 points on Hard Money and 1-2 points on long-term 30-year financing. These in my view are pretty fair and reasonable, anything much more than this I would think is excessive
Quote from @Danna Gallow:
Hey Y'all. I am @KountryNotary. I am making the transition from a Mobile Notary into Real Estate Investing. I have a great deal of experience with Real Estate Documents, strong knowledge of my local market in Southeast Texas, and enough cash saved up for my first purchase down payment. I am going to use a Hard Money Lender for my first deal and I am concerned about over paying fees.
Any advice from the Forum on how to find a Lender that doesn't charge excessive fees?
Fees on hard money loans could be excessive. Is there a specific reason you would like to go that route? If income is an issue there are DSCR loan programs available as long as you currently own a property. If you just sold your property there are also lenders that can do it at a fraction of the costs of hard money.
Hi @Danna Gallow, is there a reason that you need to use hard money? You can find a lender that charges 1.5-2 points or can finance the points into the loan for pretty much any use (fix and flip, long-term, DSCR, STR, etc.)
So, there will always be fees associated with loans. The great thing about Hard Money loans is that they are biz to biz loans. They do not ask for proof of income or tax returns. On a purchase, if your credit is good, 750 or better, then lots of hard lenders will give you 80% toward the purchase. Then you will receive a chart with interest rates and you will choose where you want to be. Some people buy down to the lowest rate they can get, some don't.
Six months ago when rates were in the 3s - everybody was buying down to the lowest rate and now those investors are locked into great rates. Now, since rates have doubled - not everybody is buying down all the way. But each interest rate has points associated with it. 1 point = 1% of the loan amount. To buy all the way down may cost 4-5 points. Or you can spend 2 points. You'll choose when it comes time.
If you have any questions about what's expected of the borrower in the lending process feel free to reach out. Because, honestly, more important than the Lender - most Hard Money Lenders have comparable products with comparable rates, is the loan office you deal with at the lender. Some loan officers are good and attentive and some are lazy and neglectful. You may have contacted a good lender but of the loan officer is lazy, slow, and neglectful then you will HATE that bank and it really won't be the bank's fault.
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Imagine... same property, two offers.
one with 640 credit and 3 flips and the other with 740 credit and no flips. Should they have the same points to get the same money... are their needs the same?
Imagine a cash out refi ... might it be worth 1/2 point more to get $40k more?
Much success!
Bob
Quote from @Bob Reinhard:
"Reasonable rates" is a subjective, comparative term. What is reasonable for one may not be for the other.
Imagine... same property, two offers.
one with 640 credit and 3 flips and the other with 740 credit and no flips. Should they have the same points to get the same money... are their needs the same?
Imagine a cash out refi ... might it be worth 1/2 point more to get $40k more?
Much success!
Bob
Thank you Bob, I sent my contact info through your messaging app.