Hard Money Loan Amount Formula

[David D.]

As a hard money lender wannabe I'm trying to figure out what formula to use in determining loan amount.

I'm thinking: the lessor of 65% ARV or 80% of purchase price. Is this too restrictive? Should it be 65% ARV only?

[Will Barnard]

Originally posted by David D.:

As a hard money lender wannabe I'm trying to figure out what formula to use in determining loan amount.

I'm thinking: the lessor of 65% ARV or 80% of purchase price. Is this too restrictive? Should it be 65% ARV only?

Restrictive? Don't worry about restrictive or not, worry about "PROTECTING" your funds. You should consider the borrower's experience and track record, their credit worthiness, and the amount of skin they have to put into the game. There are many factors that go into lending and you should not overly simplify it or risk getting hurt.