Hard money question.

4 Replies

I recently got a home under contract, old beat up 3 bed 2 bath in a neighborhood that generates homes around the 90k area. I got it for $14,500. An LLC bought it for $1 from the previous owner that pretty much had squatters in it. So The LLC was just trying to dump it. New roof and a company is coming in to install a radon mitigation system so the basement is getting a vapor barrier installed all before I even close on the house. Other than that we are looking at about a 50k rehab, ARV is at 90k. My problem is that my hard money lender pulled out because of the price I got the house and rehab costs. I found a lender that said they could do the loan but wants to see about 15k to 17k in my bank. I don't have 15k to 17k, hence the reason for the hard money loans. If I had a buddy that wanted to put 10k into the investment could I use his money and my money combined as "my funds in reserve" to get the loan. Or will they want to see how the money got there? Could my wife also pull a personal loan to cover? The deal is too good to pass up and I'm about to do some line of credit drama and fund the flip that way.

@Kodi Floyd Sounds like the HML wants you to have more cash reserves in case something goes over budget on the rehab. 401k loan? IRA withdrawal ? (put it back within 60 days so there's no penalty).

I had a friend who was a little short on the funds to close recently and she opened a margin account with her stock firm (Etrade or Fideility I believe).  No credit check and she was able to write a check within a few days.

So throwing out some options...

Ask your lender directly how they verify assets and whether you could use a partner for funds. Each lender is different.

You would have to ask the lender that question, they all have their own requirements. You'll need that cash to do the renovations because hard money lenders generally dont pay you upfront for the renovations, they will reimburse you after the work is completed.