Hard Money Lender Newbie Questions

[Grant Milstead]

Hi BP,

Does anyone have a recommendation for approaching a hard money lender as a first time buyer in a LLC with a couple partners. I understand that I will be asked along with my partner(s) to put up our own information and guarantees on the loan but what should I expect - Will they expect all members of the LLC to provide financial statements for example? Should I expect an interest rate similar to what I could get for my primary residence if I have excellent credit? Will they allow me to put the property in the name of the LLC with the borrowers on the note in our names or do both the mortgage and the property need to be in the same names?

A little newbie advice is appreciated. :)

Thanks,

Grant

[Manny Cirino]

you can put the property under the ,LLC. if you are using the LLC they they will ant the financials of the LLC because your personal accounts are out f there reach in the case of legal action. This is the purpose to setting up an LLC in the first place. I have done alot of call to alot of HML and its nothing like what your taught. Most lenders will not lend you based off ARV they will lend you a % of the project cost.

Example: you learned that if the ARV is $100k and they lend 70% LTV you should purchase at $70k minus repairs (lets say $10) $60k is your purchase price.

In actuality now lenders are a bit more stiff and will lend you 70% of the project cost(purchase price + rehab) with and a down payment(lets say 25%). So lets say your purchase price is $60k + $10k = $70k x 0.75 = $52,500 loan 

Then

$60k x 0.25 = $15,000 down payment (earnest money) with a balance of $45,000

$52,000 - $45,000 = $10,000 left on your loan for a rehab(draw for repairs from hml)

Some will require credit score, all will check financial statements, most will request a BPO or Appraisal, some will require history showing experience in the business and you as a new borrow will always pay highest interest usually 12% - 15% over 12 - 24 monthly interest only and around 2% - 5% in upfront fees. Including legal & broker fees.