I’m a licensed builder and real estate agent. I’m Looking at options to finance some spec builds. I’ve never done any kind of hard money loan. I have built some homes with partners and split everything 50/50. I feel like I could make more money doing them on my own with hard money but I’m a little apprehensive about what that might entail. So it’s a devil I know situation. What advice or experience do you guys have with this type of scenario? Who would you recommend I check out for information on a hard money loan?
Given those two choices it's easy: Which gets you the highest payday?
Just because you've never used HML isn't a reason to not go there. How much of what you now know how to do in real estate investing did you once step out in faith and just a little fear at first? HML is just the next thing you'll learn.
@Jon Wright Jon, I am a seasoned flipper and part of a private lender. I have done both - taken on partners and used private/hard money lenders.
Pros of partners - less fees, less red tape, more control.
Cons of partners - they get greedy (quickly), they aren't always dependable (they spend or use the money, and when you need it - it may not be available). You run the risk of out growing their available cash (if you are the driven type).
Using a lender (private or hard money) - the pros or cons are pretty much the opposite of the partners.
In our case we lend either 100% of the vertical build or 65% of the finished value, whichever is less. But we want the borrower to own the lot (land) free & clear, and cover costs like: soft costs, utility hookups, driveway, walkway, etc.
Maybe a hybrid is the answer. Use the partner(s) funds to help cover the portions that a lender like us doesn't fund. Then you can experience both, and perhaps do more projects. Just a thought. Rob