Private Money/ Hard Money Loans

7 Replies

Type of property matters

Whether you refi into a short term or long term loan matters 

and the time will still differ from one lender to the next 

Provide a bit more insight and we can give better parameters 

Thank you guys for responding. My thought process, is to find a multi-family home purchase it with a private lender then after holding it for a year refinance to another loan with a small interest rate and longer term.

 I'm interested in a multi-family (of I believe 6 units) home and was looking to use a private lender to get the deal done.. I don't have all the inform about the units yet as I have my agent looking into it.

@Yolanda Martinez Make sure that financing is readily available for the type of property that you wish to buy.

Some partners and I had the exact same plan and bought a lower end 6 plex in 2011 with a hard money loan. It took us 3 years until we finally found a lender (Wells Fargo) that would do it. Granted, most lenders were very risk averse at that time and things have loosened a bit since then. Luckily, we were able to cash flow while paying hard money rates so we never came out of pocket. 

5+ units is a commercial loan and those kinds of lenders like to have minimum loan amounts (maybe $500k or more) to make the loans worthwhile. We had a 6 plex worth $300-$400k and no lender wanted to look at it for 3 years.

You might need to go bigger because it might be easier to find a lender.

Yolanda,

Many times local community banks will allow for a cash out refinance based on fair market value immediately upon completion of rehab and tenant placed. Do you live in the state where the property is located? If so, great! If not, a local community bank will not lend to out of state investor. In this case, a national portfolio lender may only require you to won the property for 3 months to refinance cash out based on fair market value.

@Yolanda Martinez

Yolanda, I am a commercial lender like many of the others here that have given you very good information and advice.  The one thing I would add (which doesn't really help me) is to check with your local banks and credit unions in your community.  You be surprised what they have to offer.

Yes, it is sure that banks and credit unions do not really focus on investment property lending, but some will do it and to be honest with you their rates and terms are going to better than any hard money lender you can find most likely. 

I wish you the best.