Hard Money Lending - My first time and I need help!

31 Replies

@Michael Clay There are a ton of other factors you should take into account. I'd say some asset based lenders couldn't care less about credit score. but they will ask for previous huds to verify experience. I personally wouldn't lend to anyone that doesn't have any experience. And assuming they have experience,I'd still make sure they have adequate cash reserves in case things go south. 

You want to know the SOW and wether or not the estimate matches the SOW. I'd maybe go as far as finding out who's going to be the GC working on the project. Is she financing the repairs? Is this a cosmetic project or a full gut? And why is this person not financing the deal through a HML? I'd hope he/she is trying to get a better rate. If another HML, doesn't want to finance it then it's a red flag.

@Jeff Rabinowitz For that reason, I kept my ad extremely brief and didn't mention any specifics. Great idea,  I'll have an attorney verify that I'm in the clear. Thanks!

Account Closed She will be financing all of the repairs. I walked the project with her so I know the SOW. 

Thanks for your input!

Be careful whenever a borrower says they'll fund the rehab.  Not saying it's true in this case, but often that means lines of credit at lumber yards, lowes, home depot.  30 or 60 day pay schedules.  Moving money from one job to another.  Subs not getting paid until the end (they're optimistic and think it'll sell quick sometimes, maybe another 'partner' that is supposed to put in money that may or may not happen.  Whenever a borrower tells me they'll put up the 30k (just as an example) in rehab, I offer them to put their money in at closing-maybe even less than the 30k budget- and I'll fund the rehab in draws as they go 100%.  This protects you more.  If they start demo,and then never get back to that site, you're in a bad position as you've put in 100% and now have to put in 100% of the rehab as well when you take it back.  

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