Is this common for hard money lenders?

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Is this common for hard money lenders?

Miami, FL · Member since 2019 · 42 posts · 7 votes

So i have some one who i know is legitimate and just told me what he can offer me.

His offer is i pay 10% of property and he pays the other 90% with 9%-9.5% interest. And he also pays 100% of the rehab.

Im just wondering is this common or did i just get this lucky? I dont have the savings to use it yet but id like to know your thoughts on how good wod this offer be using the brrrr method or is this better for flipping?

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Bruce C.

Seabrook/Galveston · Member since 2018 · 274 posts · 178 votes

Jet Lending here in Houston did 70% of ARV for me last year on my first brrrr(and only second rental). House was 85k, repair estimate 10k, ARV estimate 140k. 3 points, 11.9% interest, and a few fees (1100ish). I think i paid a few hundred at closing. House appraised at 170k and I got a check after my ReFi!

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Wayne Brooks
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
7y
Yes, it’s a fair deal.
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DJ M.
Realtor · Southeast Michigan · Member since 2017 · 232 posts · 180 votes
7y
How many points? Any pre paid/upfront fees? Loan length? Sounds good from the info provided though
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Stephanie P.Pro Member
Washington, DC Mortgage Lender/Broker · Member since 2016 · 4k+ posts · 2k+ votes
7y
Originally posted by @Rolando Caceres:
So i have some one who i know is legitimate and just told me what he can offer me.
His offer is i pay 10% of property and he pays the other 90% with 9%-9.5% interest. And he also pays 100% of the rehab.
Im just wondering is this common or did i just get this lucky? I dont have the savings to use it yet but id like to know your thoughts on how good wod this offer be using the brrrr method or is this better for flipping?

Great deal for a borrower with experience. Fantastic deal for one that does not.
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Rolando Caceres
OP
Miami, FL · Member since 2019 · 42 posts · 7 votes
7y
@DJ M. Im glad i asked here on BP because now i know what else i should ask him. Thank you!
2 Reply
Rolando Caceres
OP
Miami, FL · Member since 2019 · 42 posts · 7 votes
7y
@Wayne Brooks thank you. Good to know.
0 Reply
Rolando Caceres
OP
Miami, FL · Member since 2019 · 42 posts · 7 votes
7y
@Stephanie P. Hi Stephanie. Would you mind elaborating more on your comment? Just to further educate myself. Thank you!
1 Reply
David de Luna
Rental Property Investor · NorCal · Member since 2018 · 399 posts · 222 votes
7y
That's about par to pretty good for HML, especially without experience.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
7y
Originally posted by @David de Luna:
That's about par to pretty good for HML, especially without experience.
those ARE great rates for no experience.. unless there is whopper points and junk fee's then its about par..
depends on area of country also keep in mind HML are the cheapest in CA of anywhere in the country given the competition lenders face.

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Tom Shallcross
Rental Property Investor · Chicago · Member since 2018 · 612 posts · 1k+ votes
7y
@Rolando Caceres - I agree with what's already been said on the thread. One more "gotcha" to validate there might be a cap of 70 or 75% of the ARV value that would lower that 100% of rehab number.
For example, purchase is 100k and it's a 50k rehab but their ARV only comes back at 165k. They'd only lend 70-75% which is like 120k(ish) so you'd be coming out of pocket with the remaining 30k. This is somewhat of a good thing as it's a safety net that stops you from over-valuate the ARV/doing too skinny of a deal.
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Stephanie P.Pro Member
Washington, DC Mortgage Lender/Broker · Member since 2016 · 4k+ posts · 2k+ votes
7y
Originally posted by @Rolando Caceres:
@Stephanie P. Hi Stephanie. Would you mind elaborating more on your comment? Just to further educate myself. Thank you!

HML's value a borrower's experience. Some cap the ltv for borrowers with no experience at 75%, some 80%. I haven't seen anyone do loans for borrowers with no experience to 90% regardless of the ARV. I have seen them go to 90% after 10 or more flips. Rate is great regardless.

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Bruce C.
Seabrook/Galveston · Member since 2018 · 274 posts · 178 votes
7y
Jet Lending here in Houston did 70% of ARV for me last year on my first brrrr(and only second rental). House was 85k, repair estimate 10k, ARV estimate 140k. 3 points, 11.9% interest, and a few fees (1100ish). I think i paid a few hundred at closing. House appraised at 170k and I got a check after my ReFi!
4 Reply
Rolando Caceres
OP
Miami, FL · Member since 2019 · 42 posts · 7 votes
7y
@David de Luna good to know David. Just making sure im not being ripped off. Even though it sounds great to me, my lack of experience may miss some stuff. Thank you!
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Rolando Caceres
OP
Miami, FL · Member since 2019 · 42 posts · 7 votes
7y
@Jay Hinrichs im in south florida.
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Rolando Caceres
OP
Miami, FL · Member since 2019 · 42 posts · 7 votes
7y
@Tom Shallcross ahhh that makes sense. So what are the questions i should ask my HML? Any specific list?
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Rolando Caceres
OP
Miami, FL · Member since 2019 · 42 posts · 7 votes
7y
@Stephanie P. I see. Well the reason i am getting those rates is because my brother in law is a real estate attorney who works with this HML. So im sure im getting a favor done. Thank you again stephanie.
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Stephanie P.Pro Member
Washington, DC Mortgage Lender/Broker · Member since 2016 · 4k+ posts · 2k+ votes
7y
@Rolando Caceres
What are their total fees (points, underwriting, appraisal, BPO, draw fees, entity review fee, closing fee)?
What's their max ltv on the purchase and max ltv on the renovation?
What's the max loan to value of the ARV (this could limit the initial loan)?
What's the minimum loan amount?
How much cash reserves do you need?
Do you lend in (whatever city you're trying to buy in) and do they have a minimum loan amount there?
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Rolando Caceres
OP
Miami, FL · Member since 2019 · 42 posts · 7 votes
7y
@Bruce C. Wow that sounds like a smooth BRRRR. Congrats and thank you for that example!
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Rolando Caceres
OP
Miami, FL · Member since 2019 · 42 posts · 7 votes
7y
@Stephanie P. Perfect. Im going to try and get these answered and come back to here and you tell me what u think. You are very helpful Stephanie.
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Michael Kinsella
Lender · Member since 2018 · 617 posts · 275 votes
7y
Rolando,

I think Stephanie P. and others provided some great questions/considerations.

One more thing you may want to look at is,

Is interest being charged on the total loan amount from the get-go, or just on funded amounts? Depending on how large your construction budget is, this can make a significant difference in your total cost of capital.

Warm regards,

Michael
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Noah Mccurley
Belfast, Northern Ireland · Member since 2018 · 128 posts · 56 votes
7y
@Rolando Caceres
Might as well take the deal when it’s there instead of second guessing it. TAKE IT WHILE ITS STILL THERE?
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Rolando Caceres
OP
Miami, FL · Member since 2019 · 42 posts · 7 votes
7y
@Noah Mccurley yes, thats how i felt too but thats how mistakes happen. So i like to have all my info so if a mistake happens then its all my fault. Thank you
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Tanner Marsey
Rental Property Investor · San Diego, CA · Member since 2017 · 439 posts · 578 votes
7y
Numbers seem great for a first time borrower with no prior history. As others have said make sure points and fees are taking into account.
Also make sure this is a good deal that runs smooth so you can continue to work with this lender and get even better rates and terms in the future.
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Devin Davis
Rental Property Investor · Memphis, TN · Member since 2014 · 114 posts · 40 votes
7y
@Rolando Caceres pretty common scenario
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Rolando Caceres
OP
Miami, FL · Member since 2019 · 42 posts · 7 votes
7y
@Michael Kinsella so youre asking if the 9% is being charged to the total purchase price or to the monthly? Is that what you mean?
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Alvin Uy
Rental Property Investor · Los Angeles · Member since 2019 · 284 posts · 184 votes
7y
Originally posted by @Jay Hinrichs:
Originally posted by @David de Luna:
That's about par to pretty good for HML, especially without experience.
those ARE great rates for no experience.. unless there is whopper points and junk fee's then its about par..
depends on area of country also keep in mind HML are the cheapest in CA of anywhere in the country given the competition lenders face.

Really? I was wondering if HML rates were lower outside of CA.

Im in SoCal...Ive gotten as low as 7.25% 90%LTV (depending on property BPO/credit score/experience). But someone just told me today of a lender that can do 100% LTV at 10%-13% ( with all interest payments paid at sale) depending on what the property BPO. Ive never heard of this until today.

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