Durango, CO · Member since 2016 · 92 posts · 12 votes
I am currently analyzing an opportunity that will likely require that I make a purchase in cash to expedite the sale and beat out the competition. I will need $400K. I will use this to bridge a gap between the purchase of this property and a sale of another property that will yield ~ 200K -- plenty for a refinance with funds to start rehabbing and developing the property. Of course, the sale of that property can't be predicted -- but suffice it to say that the asking price has been confirmed by a recent appraisal from a lender.
Anyway, what will a hard money lender look for and what will cause a lender to reject an application? We currently have 2 mortgages but also a decent salary with long-term employment history. The property to be purchased is on over 1 acre of land with a structure that could become a residence with zoning for several MFRs or SFRs on the land.
Hard Money Lender / Investor · Denver, CO · Member since 2011 · 50 posts · 34 votes
9y
Hi Patricia,
I am a hard money lender and would be happy to chat a bit more about your deal. That being said, every hard money lender looks at things slightly differently. We all (hard money lenders) typically look at the property more so than you the borrower but almost all these days will also be looking at you. We want to make sure that the property is a good deal, we might look at your personal credit, we might look at your income, we might look at how liquid you are (cash in the bank). We also might require some experience investing or we might be OK with funding your first deal. Some lenders will look at more than this, other might look at less. We all generally require much less documentation than a conventional loan and rely more heavily on the deal than you when look at approving.
So what could cause you to not be approved? lack of experience, tax liens, judgements, mortgage lates, high DTI, a lack of liquidity, and of course, a bad deal. Sounds like you might have a more unique deal so what you are proposing might not fall withing the lenders area of expertise.
Not sure if this helps at all but that is the mixed blessing with hard money lenders, we each do things slightly differently and so therefore, there is no easy way to answer the question!
Aurora, CO · Member since 2016 · 158 posts · 118 votes
9y
Justin Cooper , shoot me a PM. I would like contact information and possibly run deals by you in the future. Always good to have a HML on hand for those flips.
Durango, CO · Member since 2016 · 92 posts · 12 votes
9y
My apologize for letting this post hang but the property went under contract before I had a chance to figure out how to proceed. (I saw it Friday afternoon, it was gone Sunday... and so it goes). Most likely, I was not going to put together financing quickly enough (nor was it necessarily possible), although I did learn that it was probably a good purchase. As far as I know, it is still under contract -- but if that changes, I will let you know.
Lender · Denver, CO · Member since 2015 · 404 posts · 227 votes
9y
Patricia Miller It would probably be helpful if you have your financing lined up before you run across the killer deal. Even in the slower time like now, you're limiting your chances of being able to get under contract if you wait to talk to a lender after you've already found it.
Investor · Las Vegas, NV · Member since 2011 · 188 posts · 116 votes
9y
For smoking deals, just get under contract and line up the financing later.
If the deal is good, the money will come.
You'll know within a few days if you can get the financing. If you can't, just get out of it during the due diligence period.