Investor · Crofton, MD · Member since 2011 · 35 posts · 2 votes
Hello all,
I have rehabbed a good amount of properties using Hard Money and always have to come out of pocket for points, closing cost, etc. As far as Private Money I have not found that one lender who has more than 30k to lend at once. However I have several private money people who are willing to lender 10k, 20k, 30k and I feel like I am able to put that to use somehow.
I have never truly done a "no money down" deal as far as rehabbing goes. I am thinking that I can use these small amounts that the private money people have to cover all points, closing cost, and any down payment required.
Does anyone have experience at doing both PM and HM on the same deal? I am assuming HM will be in 1st position and PM in 2nd. If not, how is this structured? Can someone please explain. Will the Hard Money Lender allow a private lender cover all closing cost? Will title company have a issue with this? The money with the private lender is documented on a promissory note and handled by title company?
Wholesaler, Rehabber and Landlord · San Antonio, TX · Member since 2014 · 2k+ posts · 2k+ votes
9y
I dont know how 2nds get recorded in MD, but if I am going to do a 2nd on a property in Texas I would have all the money go to the title co so that they can record ALL liens at closing. That protects my lenders.
Wholesaler, Rehabber and Landlord · San Antonio, TX · Member since 2014 · 2k+ posts · 2k+ votes
9y
I dont know how 2nds get recorded in MD, but if I am going to do a 2nd on a property in Texas I would have all the money go to the title co so that they can record ALL liens at closing. That protects my lenders.
Lender · Euless, TX · Member since 2016 · 8 posts · 1 vote
9y
Hi Darrin,
You should also check with your HML prior to accepting PM as some do not allow for any 2nds on the property. Check their terms ahead of time so you don't cause your self to get into a bind. While our firm is one such group we also don't season money so as long as there are no second liens and the funds are in your account, we don't care where the funds came from.
If on the other hand the PM wanted to do a second lien then that would immediately cause our note to be called due.
Check your groups fine print before hand so you don't find your self in this position with them, whoever they are.
Washington, DC Mortgage Lender/Broker · Member since 2016 · 4k+ posts · 2k+ votes
9y
@darrin smith
Hey Darrin,
Most (if not all) hard money lenders want you to have a portion of the downpayment come from personal funds. That way, if things go south, you have a vested interest in making sure the project comes to a profitable completion rather than walk away.
If you've done these before, you should be able to get 90% for the purchase and then 100% of the rehab covered from an escrow hold account. 80% is pretty common as long as you buy the property right.