Hard money loans? Do I have to pay a down payment ?

15 Replies

A hard money lender is in the business of lending money. They’re almost certainly going to require a down payment as they want their borrowers to have some “skin in the game”. 

A private lender is often someone you personally know, like a friend, family member or personal acquaintance. Could even be a very close family member like your mom or dad. So in that scenario, it could be whatever you and the private lender agree to. 

Though if the private lender is smart, they’ll require you to have some “skin in the game” too. 

@Gibran Saliba - yes, as Stephanie mentioned, you will typically need 20% down (sometimes this can vary). If coming up with the down payment is an issue, you could find a joint venture partner - someone who has the cash and is willing to partner with you on the project. You could see if they could provide the funds for the down payment, you do the ground work, and split the profits at the end. If you are able to do this a couple times successfully, then hopefully you will have enough cash for your own down payment and don't have to split the profits with anyone :)

Originally posted by @Gibran Saliba :

@Mike thanks bud. How can I get joint venture partners?

 Gain knowledge and get out there and meet people. Put yourself out there and let people know you invest in real estate

@Gibran Saliba   Keep in mind in addition to the down payment, you'll typically have to "front" the funds to do the rehab work (although you'll be reimbursed after inspections).  If new, the lender will probably require some cash reserves as well, to make sure if can finish the project if you go over budget.

- Tom

amazing topic here , i lost at property that i have under contract the other day cause i dittin have at gap funding or private money , was about 66k on profit to be make ; now i am also looking to attend to meet up to build network and meet people in that area so this don t  happen again , was my very first deal  and first offer i decide i am very good with number i can spot good deal in 10 minutes

HM Lenders you have not dealt before requires ~30% down. If you are exceptionally strong borrower they will work with >20% down. After a few smooth deals they will consider <20%. Keep in mind the money and interest pay back is tied up for ~ 6 months. You need to have funds for rehab. Many take a HELOC to reduce the amount of funds on hand. The more you borrow the lower your credit score becomes.

Originally posted by @Juan Alberto Perez - Flores :

amazing topic here , i lost at property that i have under contract the other day cause i dittin have at gap funding or private money , was about 66k on profit to be make ; now i am also looking to attend to meet up to build network and meet people in that area so this don t  happen again , was my very first deal  and first offer i decide i am very good with number i can spot good deal in 10 minutes

could you have wholesaled it and did a double close?