Hard Money Loan Possible

Austin, Texas
Private Lending & Conventional Mortgage Advice
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Hard Money Loan Possible

Alan Keate
Member since 2023 · 2 posts · 0 votes

I am considering buying a lot to build a home in a new development. I don't know if I will eventually be the long-term owner but I want to build it that way. I have a current home and the thought of getting a more traditional mortgage is a nightmare given I own multiple businesses, etc. I know very little about hard money and don't know if you can put up your current home and the to-be-purchased property (the combined LTV after a hard money loan would be like 56%). I just don't know if that's a thing. Any direction would be appreciated. Thanks.

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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
3y
Quote from @Alan Keate:

I am considering buying a lot to build a home in a new development. I don't know if I will eventually be the long-term owner but I want to build it that way. I have a current home and the thought of getting a more traditional mortgage is a nightmare given I own multiple businesses, etc. I know very little about hard money and don't know if you can put up your current home and the to-be-purchased property (the combined LTV after a hard money loan would be like 56%). I just don't know if that's a thing. Any direction would be appreciated. Thanks.


I think you will find it near impossible to find a HML who will lend to you on one lot.  these types of transaction are either cash and carry or seller carry back after you put your downpayment down.. I grew up in the land business and still do a lot of land.  There are HML that will do dirt deals but that's almost exclusivly guys like me that are funding developers and larger loans 500k min to 10 to 20 mil for a big project.
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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    3y
    Quote from @Alan Keate:

    I am considering buying a lot to build a home in a new development. I don't know if I will eventually be the long-term owner but I want to build it that way. I have a current home and the thought of getting a more traditional mortgage is a nightmare given I own multiple businesses, etc. I know very little about hard money and don't know if you can put up your current home and the to-be-purchased property (the combined LTV after a hard money loan would be like 56%). I just don't know if that's a thing. Any direction would be appreciated. Thanks.


    I think you will find it near impossible to find a HML who will lend to you on one lot.  these types of transaction are either cash and carry or seller carry back after you put your downpayment down.. I grew up in the land business and still do a lot of land.  There are HML that will do dirt deals but that's almost exclusivly guys like me that are funding developers and larger loans 500k min to 10 to 20 mil for a big project.
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    JLH Capital Partners51 Review
    WebsiteView Page
    1Reply
  • Michael Kinsella
    Lender · Member since 2018 · 617 posts · 275 votes
    3y

    Hi Alan,

    A few points to consider;

    - Many HMLs will stay away from primary residences as collateral and will stick to non-owner occupied investment properties, so your options are likely to be limited.

    - You may want to speak with some local banks initially, just to gauge their interest. You are correct in that banks or traditional capital sources are likely to be more stringent in their underwriting requirements, but they can potentially provide cheaper capital than HMLs if that is a concern.

    - Some HMLs (using that term loosely) provide ground-up construction financing. It seems that you are looking to both acquire a lot and build on it. As such, you'll probably want funds for the acquisition of the lot and also the construction of the subject property. Do note that construction funds are typically structured as a holdback, so they aren't released upon the initial funding of the loan, but typically on a reimbursement basis once some portion of the work has been completed and you've requested an inspection/construction draw.

    - As @Jay Hinrichs said above, if you are looking at funds for solely acquiring land, your options are likely to be quite limited. HMLs who provide land acquisition or bridge loans are generally looking for larger deals, and have strict loan minimums.

    Hope this is helpful,

    Michael

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  • Eliott Elias
    Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes
    3y

    Your deal has to be a home run to execute this. Primary residence won't work. 

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  • Account Closed
    Member since 2021 · 10 posts · 1 vote
    3y

    Hi Alan would love to connect with you about  Hard money possibility.

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  • Alan Keate
    OP
    Member since 2023 · 2 posts · 0 votes
    3y

    Thanks everyone for the feedback.  

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