Best Hard Money Rates

7 Replies

Most of the ads seem to say most HMLs will lend 65% to 70% LTV for rehab projects; but in reality, most of the quotes seem to be in the 35% to 40% LTV range. They often mention only funding 80% of both purchase and rehab cost upto 65% LTV and require the 20% down at closing. Rates of anywhere from 12% to 15% and additional 3 to 5 points.

Are you guys also getting similar rates or are there better rates out there? Either from national HMLs, local HMLs in your area or in Florida?

Heard or aware of HMLs that typically finance 100% of both purchase and rehab cost?

Updated over 3 years ago

Clarification here. Most of the HMLs advertise 65 to 70% ARV but actually offer 80% of both purchase and rehab cost up to the 65 or 70% ARV.

Don't know any HMLs that will do 100%.  Only family or close friends will do that from my experience.  

In my area (California) we'll do Hard Money Loans up to 75% and rates from 9-12% based on that LTV, higher the LTV higher the rate. Points from 2-5. Local Hard Money Lenders I've found offer better rates and points and will do higher LTVs.

Account Closed

The answer is it depends. LTV, rates, and terms will depend on the...

  • Borrowers qualifications 
  • Amount of equity in the deal 
  • Exit strategy 

You shouldn't expect for a lender to commit to offering 100% financing without first showing them your track record, ability to service the debt, and credit history. And if you do come across a lender who is offering 100% without first collecting more information, it should raise a red flag.

You don't necessarily need to have a deal to establish a relationship with a hard money lender. Reach out to some HML's in your area, tell them about who you are and your past experience, and ask what their typical requirements are for getting pre-approved. Once you get pre-approved it is easier for the lender to give you an idea of what kind of terms they can offer.

Real estate is a relationship based business and having a good hard money lender on your team can add value to your business by..

  • Having an advanced knowledge of the markets they lend in
  • Connecting you with other business professionals
  • Helping you close deals under time sensitive scenarios
  • Offering free resources that can help give you an edge

With that being said not all HML's are created equal. You need to find one that is/has...

  • Reliable- Someone who says what they do and does what they say
  • Integrity- They set the right expectation from the beginning
  • Transparent- Upfront about costs and no surprise fees after it's too late

Learning the basic terminology and knowing what a lender is looking for will increase the likelihood of getting your loan request approved. Here is a good article that @Brandon Turner wrote about investment property loans.

@Matthew Nixon

Sorry Matt but most of what you wrote seem to be an advertisement of some sort and somewhere from marginally to almost completely irrelevant to the initial question. The somewhat overly defensive tone also doesn't help.

 @Kendrick Walker :

Don't know any HMLs that will do 100%.  Only family or close friends will do that from my experience.  

In my area (California) we'll do Hard Money Loans up to 75% and rates from 9-12% based on that LTV, higher the LTV higher the rate. Points from 2-5. Local Hard Money Lenders I've found offer better rates and points and will do higher LTVs.

I think there might have been some confusion in the initial posting. Meant that most of the advertisements from HMLs were 65 to 70% of ARV but based on the quotes, the loan to ARV appear to be in the 35 to 40% range.

In your case and in California, you appear to do up to 75% of ARV? So you can fund 100% of the project (both purchase and rehab) upto the 75% of ARV or do you also only fund both 80% of purchase and rehab cost up to the 75% of ARV? Do you also require the 20% down, regardless of the % of ARV that you fund?

Hey Kenneth,

Sorry for the misunderstanding. I don't do ARV loan, only acquisition loans. There are a couple of other companies around me that will do ARV loans, but I don't know their requirements or what they offer - only that they do ARV loans.

Ken

Account Closed

No need to be sorry. My intention was to answer your question of whether or not HML's will finance 100% of the project cost. If you didn't understand my answer or didn't find any value in my response, which included some ideas and tips on how to build a relationship with a hard money lender, that's quite all right.

For my own reference, which part of my post came off as overly defensive?

Account Closed

Most of the private money lenders who are willing to lend 100% purchase and rehab usually do it in their local areas. They also require the investors to be considerably experienced. Anything outside their footprint or lending funds to fairly new investors becomes an extreme risk. I know of a few but only in select states.

The 80% LTV you mentioned is pretty accurate for a few lenders and they can do it nationwide. I actually work with one lender who not only does 80% of the PP but also 100% of the rehab.

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here