Searching for hard money

7 Replies

I am trying to put together a raw land deal. I am not completely new to real estate and have a fairly large portfolio. Have only done buy and hold up until this point. I am planning on moving into land development. I currently do excavation/forestry mulching/etc. I stumbled across a deal that I believe will be a very good “mini” development, to purchase, clean up, and subdivide a small parcel in the county. I paid cash to build my most recent house and am somewhat cash poor. I have good income and credit but at not wanting to go through a bank, partially because of time and partially because I want to make a cash offer on the place I’m looking at. The property is not a large property but it is very raw. This will basically be a flip on a raw property. Purchase, clear, clean up, improve, subdivide, sell.

My question is, how do I go about finding the right hard money lender for this kind of project?

Also, what are reasonable terms for something like this?

Since you have a fairly large portfolio, I presume a portfolio with standing buildings, perhaps the best way to approach it is to do a cash out refi on one of your current properties to free up equity that you can spend on, for instance, your "mini development".

HMLs willing to lend on land only are not that common. Also if the amounts needed are small then most HMLs won't lend less than $75K.

But pulling equity from an existing property might make a HML easier to find - if the numbers make sense of course.

@Taylor Christian As Benjamin mentioned, very hard to find lenders for land only and I agree some sort of HELOC from your existing properties might be better.

Also remember HML is not a "cash" offer. It's still a loan that can still fall through for a variety of reasons.

@Tom S.

I was planning on refinancing a rental that has a little over $100k equity in it but have decided to sell it this next year when leases are up due to the fact that the rental rates have not kept up with the appreciation of the housing market. The cost of the refi wouldn’t be worth having 75% of the money less than a year early, in my opinion.

My other properties are a buy and hold of several adjoining properties for a future development. I built a large barndominium on one of these properties and paid cash for the build as well as the property. I would rather not have a house payment, so I’m keeping that off of options as well. However it is the reason I’m cash poor at the moment. Also, cannot get govt backed loan on a barndominium, according to the bank.

One other separate property I have is going on the market in a couple weeks of finishing it up, but no telling how long it will take to get the funds on that.

Trying to find a hard money guy do to the fact that good deals, especially right now, don’t last long. I’m not worried about qualifying, I make a good living and have great credit and assets as well.

What kind of rates and terms are typical of a loan like I’m looking for?

@Benjamin Hurwitz

I’m looking for $100-$120k to turn a place into 3 lots for $60-$70k/lot.

What would pulling money out of an existing investment do to help me find a hard money lender? If I pulled the equity out of an existing property, I would no longer have need for a HML.

Originally posted by @Taylor Christian :

@Benjamin Hurwitz

I’m looking for $100-$120k to turn a place into 3 lots for $60-$70k/lot.

What would pulling money out of an existing investment do to help me find a hard money lender? If I pulled the equity out of an existing property, I would no longer have need for a HML.

If you can pull equity out of an existing property for use in your land subdivision plans via conventional funding then that's great. If however conventional funding is not available or desirable for you, then a HML can step in to pull that equity.

If however you cannot pull equity out of your existing properties and your conventional lenders won't lend on land, then indeed you may have to search for that rare HML who will lend on land.

Best of luck in your endeavors.

I would ask around the investors you know and go to your local REIA meeting and talk to the hard money lenders that are vendors there.

@Benjamin Hurwitz I understand now, thank you for the clarification. I am not really interested in leveraging on of my larger properties for the amount of money I need and I am not really interested in having one half a million dollar note hanging over my head at this time either.  

I guess I am really looking for a private money investor to partner with on certain projects so that I dont have to spend the time messing with a bank when I am in a hurry. What kind of rates do yall typically see in this kind of transaction? I have one investor, but I think he is a little high if I correctly understand what his terms were. 

@Andrew Syrios , I will check the REIA meetings out. Im a little strapped for time with the way work is right now, but I will try to make it to one.

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