Interviewing hard money lender

4 Replies

I wonder if anyone could help me with some pointers or questions on interviewing hard money lenders, banks for financing or refinancing investment properties.

If you also know of a book that addresses this specifically, or a thread, I want to be prepared for my first brrrr and want to have a few lenders in my pocket if nothing more than for confidence.

So, if my BiggerPockets friends and colleagues could help, having questions so that I can call and filter HML and banks to refinance to build a list. I know I am missing a lot of questions outside the main ones.

Thank you all infinitely for your time and wisdom.

Originally posted by @Steven Bays :

I wonder if anyone could help me with some pointers or questions on interviewing hard money lenders, banks for financing or refinancing investment properties.

If you also know of a book that addresses this specifically, or a thread, I want to be prepared for my first brrrr and want to have a few lenders in my pocket if nothing more than for confidence.

So, if my BiggerPockets friends and colleagues could help, having questions so that I can call and filter HML and banks to refinance to build a list. I know I am missing a lot of questions outside the main ones.

Thank you all infinitely for your time and wisdom.

There does not seem to be a plethora of HMLs wanting to lend short term loans in OH, I was searching around for one the other day for a client we could not service ourselves.

If you, the property and the deal all qualify for conventional loans, go for the conventional loans. Hard Money will have higher interest rates and probably higher closing costs than conventional. HMLs are used when conventional loans dont want to lend to you or on the property or close fast enough for the deal

When approaching a HML you can discuss general terms and rates if you like but it will be even more beneficial if have: Your target property address (if you have one), property type, approximate loan size and LTV and rehab amounts if any and ARV. Your credit score, your number of previous deals. If it's a long term refinance have the rental, tax and insurance on hand for DTI calculations.

Questions to ask a HML depend on your needs but can include: Loan minimums, can they lend in that state, MSA requirements (if you are investing in rural properties), interest rates, interest rate types (eg. Fixed, interest only, fully amortized or balloon etc...), closing points, up front fees, percentage of purchase/LTV/ARV caps, is rehab upfront or in arrears...

But start with Loan Minimums. If you need $50k including rehab and their minimum loan size is $80k (like mine) then the other questions are moot at least for your current loan needs.

Best of luck with building your BRRRR empire!

@Benjamin Hurwitz

I appreciate the post thanks. Yea I’m hoping to find someone in cinci to help so I don’t have to use all of mine right off the bat.

Thanks!!

Originally posted by @Steven Bays :

I wonder if anyone could help me with some pointers or questions on interviewing hard money lenders, banks for financing or refinancing investment properties.

If you also know of a book that addresses this specifically, or a thread, I want to be prepared for my first brrrr and want to have a few lenders in my pocket if nothing more than for confidence.

So, if my BiggerPockets friends and colleagues could help, having questions so that I can call and filter HML and banks to refinance to build a list. I know I am missing a lot of questions outside the main ones.

Thank you all infinitely for your time and wisdom.

 Here are a few things to ask.

On HML, I am assuming you know the basic ones such term, fees, LTV or LTC ratios, closing time etc.

Here are some that can get overlooked 

Do you have any prepay or any minimum amount of interest that needs to be paid.

If loan is not paid off after term is up what happens? 

If lending rehab funds, how does draw process work.

Do you require 3rd party appraisal or do in house valuation. Is there a cost for that?

Are you a direct lender who uses your own capital to fund loan or is there a 3rd party who helps fund the loan.

Do you require a licensed contractor to do repairs when lending rehab funds. Can you change your rehab plans after you close? 

Questions that are helpful to ask refi bank.

Can you count 100% of current or potential rental income to help qualify for loan. Does that count immediately or after x amount of time.

Is there a seasoning period?

Can you lend to an LLC.