Hard Money

[Bil Casimir]

We have been pre approved by 2 hard money lenders. After looking at the high interest and points provided by these 2 companies I am thinking maybe conventional loan? I know on conventional you will have to pay about 20% down but with the hard money your paying basically the same? We are new to the business but not new to construction. Any input would be much appreciated, just want to make the right decisions.

Thanks,

[Ann Bellamy]

If the property is in poor condition, you are going to have trouble with conventional due to property condition. Also, if you go conventional residential, and then payoff the loan in a few months, after a couple times, the conventional lender will say no thank you. They don't make any money, and in fact the originator sometimes will be charged back his fee if the loan pays off too quickly.

Having said that, if you can get conventional, and want to own in your own name, or can get conventional commercial and buy in an entity, and are not deceiving the lender as to the intent of the loan, then go for it if you can wait for the deal to close.

I never recommend that borrowers go hard money if they can get conventional, unless the time frame doesn't work. I also have a couple borrowers who love working with me because I make their life easier, and who hate banks. So they are willing to pay higher rates because of ease of access to funds. Time is money. They pick up the phone and the deal is done. Of course, it takes a while for a borrower to get to that status.