Hard Money Lenders in rural areas for projects under $50k

10 Replies

Purchase + rehab under $50k? It would be too low for the HML and too expensive for you. That's why it doesn't exists.

You are much better collecting that $50k through your saving, a loan from the family and/or private money. The tough part will be to sell them on your idea but at least that's up to you.

Originally posted by @Matthew Crivelli :

@Melyssa Peronto These lenders don't exist unfortunately.

your right they really don't exist but I have personally made a career of it doing 10 to 20 of these per month.. for me i love it I have no competition.. when other lenders say minimum loan size 75 to 100k My program is max loan 75 to 100k LOL.. its a totally undeserved niche. But its not the same pricing as HML at 100k and above you would go broke doing that..

what i find though is in these rural low value assets a lot of the folks have quite a bit higher % margins than the highly competitive what everyone is chasing urban buy and hold in the quote un quote cash flow markets.. 

For those not in the industry the reason lenders wont go that low is really simply a math problem.. if they have to stick to their pricing sale 2 and 12 or so and its a 30k loan.. thats a whopping 600 in points and very small amount of interest payments which are always shared with teh investor or credit line or wall st guidance line they have to HML make money on the delta between what their capital costs and what they can put it out for.. then you have defaults the cost in many of these Eastern states and time lines to foreclosure is hugely expensive and time lines are forever.. so if your only making 1k or 1500 on a file and have to foreclosure you just lost a bunch of dough.

it takes no more time or effort to do a 500k HML at 2 points 10k of revenue to lender and the delta on interest of course is much nicer. The same time and effort is into making a 30k loan with 2 points or 600.00 and tiny delta..

Local banks will do this for the prime depositors because that's in their charter to support their local market.  But it can be difficult for one who does not reside in the foot print to get those local banks to loan to them..  I know it has been for me.  although not impossible but then again I am going for 2 to 5 million dollar guidance lines so its a little different in my personal situation.

So for those of you looking to borrow money on very low value rural assets thats the situation.. and the majority of those loans are done between private ( truly Private) lenders IE people you know personally that are not in the lending bizz per se.

Lastly if you look at a settlement statement I I look at a lot of them as stated at least 20 a month.. when people refi to pay me off their cost of loans is always at least 4k in fee's junk fee  points other service and review fee's to the lender the lenders MUST bring in 4k per file to stay alive so you can have the guys/gals that low ball on points but junk fee it up at the closing table  ..

NO lender who has overhead and such can survive on 1k or 1500 a file .. unless of course its their own money and they are just one man band.