Would a HML lend to 100% of funds if it was 70% LTV?

Question

If I was able to buy a property for more than 30% below Fair Market Value and Appraisal, would any HML provide 100% of the funds used to acquire it? Class A asset and HML would have the only lien on it. (If not, what if I put $1k down or $5K down)

Thanks

Jonathan

Thanks

Jonathan

David T. · Answer

They are almost the same thing. The institutions call it Bridge Finance and Private Lenders call it hard money, lol. Most HMLs don't like 100% deals and besides, you are putting yourself in a poor negotiation position with any lender as far as the terms go. You might be better finding a more creative way of doing your first deal. Best of luck with it!

Jonathan Napper · Answer

Are there interest rate differences between a HML loan for 6 months and a Bridge loan for 6 months?

Jeff Trevarthen · Answer

You'll need hard money or private money.  Banks will use the lower of the appraisal or the purchase price as the value and you'll have to bring in money from there if you want a traditional loan.

Tony Tran · Answer

@Jonathan Napper

There is some missing information. What is the condition of the property?

Let's look at two scenarios...one at very good condition (no rehab) and one that needs rehab).

Scenario 1: No Rehab

You may be able to get away with it because it is still 30% FMV and there is no need for repairs. They may need an appraisal and proof of upgrades. In the end, it comes down to the HML underwriting.

Most people would call this a bridge loan, or "temporary" loan. For a bridge loan, there are other type of lenders that will be willingly support this.

Scenario 2: Rehab Needed

If rehab is needed, the HML may not without "skin in the game". This is because they are fronting the majority of the cash. In this case, it would be all. You may be able to luck out and get it 100%, if not, I would be creative in how to fund the deal.

Hope this helps!

Tony

Joshua Houchins · Answer

@Jonathan Napper I would assume your exit stragitity  is to flip the property?  This is such a broad question because every lender has different terms.  Most will charge you points up front plus you will have closing cost, insurance etc. also a lot of lenders will make you pay for any rehab then get refunded for the cost on a draw basis.  Plus I don't know the numbers to the deal so 5 k might cover those cost.  Most hml will charge between 2-5 points and 12-15% interest.