I would like to ask for the best strategy and hopefully also some pointers on finding private investors (referral would be greatly appreciated too).
I just won an online bid about $600k. The property has to be purchased all cash within 1 month.
Problem is that I only have about 320k cash. So I need about 280k -300 k to cover the balance.
I have shopped for hard money lender.. and most of them charge about 2-3 points with about 10 % interest. And most of them require appraiser to come and value the property. The problem is that I don't have access to the property yet.. and they won't let me send the appraiser.
Also I don't mind 10% interest but 2-3 points is very high.
So my question would be
1. What would be the best option for my scenario? (more economical option that I could do within this 3.5 week time)
2. Where can I find private investor/lender who would want to work with me?
3. Since I'm new on this... what is the collateral when working with private investor or lender? will the title be split between me and him ... then after I pay him back.. it would change the title back to me?
Thank you very much for your help
Will this home qualify for conventional financing?
This house has unpermitted pool... I have a lender that will accept this as conventional financing.
If you know any hard money out there that doesn't have point .. that'll be great option too.
If you don't have access to the property, you won't be able to get conventional financing either because you don't have access for an appraiser.
You should definitely use hard money or private investors. If hard money charges a few points, that's much cheaper than the 10-50% a private investor/partner will take. If you bought it at a discount, you just need to consider the points as the cost of doing business. If you shop, you can find some that do their own valuations, especially if they are only lending about 50% of the purchase price.
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@Andrew Yip any requests for lenders must go into the Marketplace.
10% and 2-3 points is cheap for hard money in most areas. Sounds about typical for CA, from what others have posted. The points are going to be deducted from the loan. So, a $300K loan with 3 points will put $291K in your pocket, before any other fees.
Private money lenders are people you meet and personally know. It take time to meet them, time you don't have. You find them by talking to people you know and people you meet about what you do. Anyone else is going to be, in reality, a hard money lender. Even if they call themselves a private money lender.
Hard money lender, though, are financed purchases. If the terms were all cash, getting a loan against this property isn't going to qualify for a cash purchase. Do you have any other properties (with equity) that could be pledged? This is called "cross collaterialization." You're looking only about a 50% LTV loan, assuming its truly worth $600K. Another property plus your cash might be able to get you past the appraisal issue.
A hard money lender is typically a lienholder. You pledge the property as security interest. You're the owner, the lender has the right to foreclose and take the property. And a hard money lender will, if you default on the loan.
Thank you Robert and Jon for your advice. As you can tell , I'm very new on this.
So far my deals has always been conventional and this is the first time, I'm buying property all cash.
Is there any hard money loan that is not secured by property? I'm willing to pay the point and interest at this point to get this going.
I have 3 properties so far. With Heloc, I can only pull maxed 400 k. (I used up heloc for other purpose, and also I don't want to max it out in case if something happen). The balance that I need is 200k.
Do you have any hard money referral that can help me in my situation? 3 of hard money that I contacted require appraisal and all loans is secured by the property.
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