Any Hard Money Lenders that charge 0 points?

Question

I know there are a lot of hard money lenders listed on the site, but I wanted to know if anyone had a personal experience with one that met all the following criteria:

1. 100% of funds given for purchase, rehab, all associated costs up to 70% ARV

2. A buy in fee less than 3k just to be in the program

3. 15% APR or less, 0 points

Trying to find slightly more reasonable hard money costs for my first flip.

Tags: Seattle, Tacoma, Renton, Kent, Auburn, Federal Way in WA

Thanks!

Darren Eady · Answer

Yep . . . your mom!

Jay Hinrichs · Answer

@Autumn Allen  please don't take this personally.. but you have ZERO chance of getting a loan from any lender who has any kind of experience.. your direct family because your family are the only one's that would do this.

On top of that you have no business trying to do this with no money.... your one flat tire or some problem with the house away from a total failure.

Save up some money.. or get a money partner. If in deed you bring any value to the proposition.

Fasted way to fail completely and utterly is to going into a RE deal without substantial cash reserves.

There was a day when lenders would lend based on equity but that ship sailed and Sank into the striaght of San Juan De Fuca.... its suicide as a lender to do that

There is one Hard money lender on this site that advertises no money down and I think that is maybe were your getting your thought of paying up front.. this is always a very poor business model in most professional lenders mind.. they just make money on the up front fee and funding deals that are few and far between.

Jason Hirko · Answer

When you say buy-in fee just to be in the program, what are you referring to?

Some lenders will do low or no down-payment, and some will do low (never heard of no) points, but not both. But when you are evaluating lenders, keep in mind that the less you put down, the higher the risk is for the lender, and the only way for them to make up for that is a higher rate. You can maybe have one or the other, but not both. And the other thing to remember is a hard money loan is interest only - therefore if you're having troubling getting enough money to bring to closing, and since a flip doesn't produce any income until it sells, any HML is going to wonder how you're going to make the loan maintenance payments. You might be better off finding an equity partner to fund your first flip, and split the profits.

Alex Chin · Answer

@Autumn Allen - honestly, the terms you have outlined in your original post sound like what you could expect from a family member. No HML would give you anything close to said terms without some sort of track record or established relationship.

I would say that if you are trying to do a flip and have less than $10K that you can bring to the table, you are dangerously under-capitalized and should absolutely look for an equity partner. A single "uh-oh" incident in the flip can potentially wipe you out at that point. I know it smarts a bit, having to give up a large portion of the profits, but until you have the capital and track record to get more favorable terms and survive a few change orders, it is a price worth paying to reduce your risk.

If you've shopped around for a while and cannot find a partner that will help fund the deal, you may have to consider that it isn't that great a deal in the first place. If you have time to bring specifics in front of the next Lakewood-Tacoma or Seattle/Eastside BD Meet-Up, there are experienced flippers who regularly attend these gatherings who could analyze your deal and let you know if they are interested in partnering.

Good luck!

Jason Hirko · Answer

@david troung We charge 10% and 2% for both purchase and rehab, so now that's the best you've seen :-)

@autumn Allen I'd be very wary of something like that. As I said before, I think your best bet is to find a partner to fund it. If there's a 30 point spread between your purchase/repairs and ARV, it should be pretty easy to find someone. If not, keep looking.

Autumn Allen · Answer

@Jason Hirko the company is actually one that is featured on BP. They said "3k-one time fee. Includes first property evaluation and your first initial access to 750k in funds"

David Truong · Answer

Like others have said, no way you'll find someone that isn't trying to scam you that will give you those terms. The best I've seen is 2pts and 12% but for purchase only and you'll need to fund the rehab. If you want them to fund the rehab also you'll see at least 3-4pts.

That said, since you are a wholesaler best approach is either find private money from family/friends or partner up with a flipper and not charge a wholesale fee. And like Alex said, if you can't find someone that is willing to partner on a deal you get, it likely isn't a deal. I'd say get some wholesale deals and save up that cash so you could then eventually partner up with someone. So if you get any contracts send them my way ;)

Autumn Allen · Answer

@Jeff Copeland ok thanks. It's hard when you are first starting out with doing your own flips. 3k is a lot to me just to be able to access funds. I could do 1,500 for example. But it seems like, just in terms of points alone, that it's hard to find unless relationships are established.

Jeff Copeland · Answer

Most hard money lenders are going to expect around 20% down and charge 2-4 points, with interest rates in the low teens.  Note that you may be able to negotiate better terms as you establish a relationship with a lender (i.e. borrow & repay multiple times with a good track record). But you won't find a zero-down HML.

Any Hard Money Lenders that charge 0 points?

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