Hard money lenders who work with newbies
Hey, i hope you all are doing well. I haven't posted here in a while as ive just been working to save money and make strides in rebuilding credit to leverage for scale in the future. Im writing because i am searching for some leads on Hard Money lenders who work with newbies. People who may be on their first buy and hold project or flip. What are the terms like? What are some of the consequences you've had to deal with for not paying back the money on time? Which types of banks can a newbie go to for a Re-fi if i invoke the BRRRR strategy? Do the lenders want licensed contractors or can i involve family who have verifiable experience in some of these areas?
Most hard money lenders are going to require a larger down payment and more fees to lend to a first timer. You might be able to get away with 25% down if the deal is good enough. Typically count on paying at least 3 points, some fees, and 12% interest, although this varies from lender to lender.
Kasan it all depends on how much money you are going to need, for Newbie the biggest struggle will be to build trust. So you will have to present and extremely good business case ROI (good return in less than a year). My suggestion is to get the money from Family and friends, and use the property as collateral so in case the deal goes bad worse case you sell the property and they get their money back. The key is for you to find the right property and provide detail plan of the costs you plan to incur and the expected savings. A lot of research has to be done and detail analysis. Without a good credit score history or good income you will struggle to get your first loans with a Bank or Online Money lenders.
So go with friends and family!!!
good luck!!
Hello Kasan,
In regards to new investors, HML will look for strong credit and liquidity which includes checking, savings, money markets, 401Ks, IRAs, Bonds, Stock, Mutual Funds, etc. Typically will require 20-25% down on acquisition and rehab. 11-14% interest. Additionally will not typically lend to first time home buyers.
Consequences for not paying loan within 30 days of due date will result in lender reporting late pays to credit bureaus. If lat pays go on long enough a foreclosure will take place.
Some lenders require licensed contractor where other may not ask for contractor resume and license.
Hello Kasan,
Typically they do require 25% downpayment for acquisition and rehab. The interest rate can be 10.5 %. We do require a licensed contractor.
@angel what if you d9nt really have a family and friend resource to acquire the funds needes to do the first deal?
@Rhinesca Desimone would that same 25% be applicable to something like a handful of low cost properties? Say in a ppace like Detroit or Harrisburg pa? Where you can buy a single or multi from anywhere from 10k-60k?
@Kasan Kelley My suggestion is to start off on a small single family property you can afford with savings and maybe rehab on credit. Its not ideal but if you're priority is to get your portfolio started and making good cash flow is not, then you'll get to where you want to get to sooner vs. trying to find someone to loan you the money. My biggest advice is to ask yourself the question, how bad do you want it? If how bad you want it requires you buying something really cheap ($30k or less) that needs a lot of rehab and so you have to live in it while you do the work yourself to create sweat equity. Will take a lot more time but the feeling at the end is priceless, knowing you did it all on your own. People will see this and respect you more for it, subsequently they will loan you the money on the next deal because you demonstrated enough character that you were willing to grind it out.
Originally posted by @Alexcia White:
@Kasan Kelley I am a newbie also was same place where you at with those concerns, after seeking around I was refer to a lender with 15% down and 75% rehab 6 mths reserve Interset which I was so thankful for it. Inbox me if you would like more details..
Can you provide the lender you used with these terms. I too am interested and don't have the "family, friends" network to borrow the money from; unfortunately everyone does not have those options.
@ Lateeka Mosley im in nyc as well. Can we talk a little more?
@Rhinesca DeSimone i will be contacting you soon
@Nathaniel Larrea i am looking more into buy and hold. I wouldn't mind doing some flips here and there. I have a property I've had my eye on that has great flip potential.
Originally posted by @Kasan Kelley:
@ Lateeka Mosley im in nyc as well. Can we talk a little more?
@Rhinesca DeSimone i will be contacting you soon
@Nathaniel Larrea i am looking more into buy and hold. I wouldn't mind doing some flips here and there. I have a property I've had my eye on that has great flip potential.
Kasan, we can chat. I actually started a new topic discussion regarding this topic. I tried to copy you on it but it didnt work. Its called: Hard money lenders hard to come by...Creative funding options???
