Hard Money loan question

[Christopher Adams]

Hello BP,

So I have been doing a lot of reading and research on this topic and am still a little confused. I have potentially found a deal in the Bay Area that I would like to move forward on. I am looking to find a hard money lender who does at least 70% ARV loan, I do have money saved and I have access to capitol as well. Now before I write an offer do I need anything from a HML? Like a pre-qualified letter or anything of that sort? Also how long can a HML take? I haven't even reached out to one yet being we have been looking for deals. I would assume they are all different but have the same concept.

I guess any advice on this or even HML contacts in the Bay Area would be great.

Thank you, 

[Jeff Pollack]

Hey @Christopher Adams,

You can find HML who will do leverage as high as 80/80 loans in the Bay Area. Specifically, they will loan 80% of purchase plus 80% of rehab. So, if you have a $1m purchase price and $200k rehab they will lend you $960k, leaving you with a $240k gap to fill. They will charge you about 2 points and 10%, depending on the term of the loan, your experience, etc. Rates will drop a bit as you build a relationship with them. Most hard money lenders will want "skin in the game" in the form of your own cash as Jay said, but there are others who don't care if you fill the gap with private money in 2nd position.

The first time you do business with them it will take a solid 10+ business days for them to approve you.  It will be much faster the next time around after they have all your docs.

If you are buying from anybody represented by a broker they will ask for proof of funds. Once approved the hard money lender will provide you a POF letter.

Happy Hunting!