Hardmoney for a single family rental I own.

12 Replies

I used a hard money lender in the Pittsburgh area hardmoneypgh.com. I would like to use them again however I only need a little over 20k to rehab this home and get it rented. The plan is to rehab home, rent it out and go to the bank and take out money against the property and then reinvest in a 2 - 4 unit home. 

The issue with the hard money lender I dealt with requires a minimum of 30k. I would pay interest on that 30k. I don't need 30k. I could take out 30k and ot use the full amount and pay back what I did not use. I would rather not pay interest on 30k but pay interest on 20k. Does anyone have any recommendations in my area or nationally?

Thanks

@Charles Coaston

How much time will it take you rehab and rent ?
If the extra interest is minimal and helps you obtain your 2-4 unit goal quicker then i would just take the 30K. Every month you don't rent is lost money

@Dan Gamache

After the rehab, the property would appraise at 105k. I paid 22k for it. 

When I made this post I also message my hard money lender to see if he would make an exception. He agreed. So i think I'm good. I'll be able to do 20k. 

@Roman M.

Wow! minimum 100k!! Good thing I live in the Pittsburgh area where the economy is different. I could see how some would only go that route. 

Originally posted by @Charles Coaston :

I used a hard money lender in the Pittsburgh area hardmoneypgh.com. I would like to use them again however I only need a little over 20k to rehab this home and get it rented. The plan is to rehab home, rent it out and go to the bank and take out money against the property and then reinvest in a 2 - 4 unit home. 

The issue with the hard money lender I dealt with requires a minimum of 30k. I would pay interest on that 30k. I don't need 30k. I could take out 30k and ot use the full amount and pay back what I did not use. I would rather not pay interest on 30k but pay interest on 20k. Does anyone have any recommendations in my area or nationally?

Thanks

Credit cards?

Rehab is only $20k?  HD is running a zero interest sale on purchase over $2k

I think. Go get a card with them and buy all your supplies. You could probably get a LOC from

WF or a cash advance from most credit cards to pay for the labor and spend less than you will with HM. Mine has $2500 min origination fee plus a bunch of doc fees. I’d spend $5k for the 20k loan. 

@Bruce C.

Yes, the rehab is only 20k more with 10% unforeseen cost. What do you mean by HD? Whats a LOC? I just got a Wells Fargo Card with there offering is that what you mean?

$2500 just to give you the money? Wonder if it is different if you already own the home. 

HD - homedepot. They are running a special - use (get if you don’t have one) their HD credit card, and purchases over $2k are interest free for 12 months. 

LOC - Line of credit. WF will give unsecured LOCs up to 100k. Better than hard money unless you've got a really good HM rate. There is no origination fee to pull the money. You do have a little higher monthly payment as they make you pay 1% of the debt down, but you can always pull back out. Unless your W2 is really good though, you're probably not getting close to $100k, but $20k is easily attainable.

HM - where I’m at, no. As Jay and many will attest, most companies loaning money are going to charge $4-5k at least just to make money. It costs them about the same to lend $20k as it does $75k, so they don’t typically lend that little. If you’ve got someone not charging you much, stick with them, and PM me their contact while you’re at it:)! How much are they charging you to originate the loan?

Can you take out a personal loan to do the rest? Most credit unions offer some type of personal loan product/line of credit and will be cheaper than a HML.

@Stephanie P.

I have the credit cards but i'll have situations where I need to give someone cash.  Yes, I can get cash advances but im not sure I want to play the credit card game. although I could use my WF as a back up cause its interest free until 2021

Credit card debt is just as bad as HM debt. If you’ve got a low interest/zero interest CC FOR 6-12 months and also a low draw fee (most no more than 5%, a little hunting and 3% should be easy to find), you can come out ahead. I wouldn’t recommend it if you were needing $50k in labor, but for something this small you’ve got a shot at squeezing a little more out of your return.