Hard money lender vs conventional

[Brittney Housley]

Hello, we are looking to purchase a turnkey condo to rent out in the Westminster/Thornton area. We are ok with updating appliances and maybe some other minor work. 

I feel like this is a good place for us to start. My question is should I use a conventional loan or hard money lender?any recommendations for hard money lenders in metro Denver?

[Justin Cooper]

Hi @Brittney Housley, I am a hard money lender here in Denver.

That being said,  I don't think Hard Money is the right choice for you in this situation.

Typically on a turnkey purchase, there is no major work to be done, and thus no major increase in value coming from the work. Most times, hard money lenders are lending based on the ARV of the property and want to see the ugly properties with a lot of upside. Hard Money Lenders are usually capped at around 70% LTV of that ARV. But if there are no real repairs and value increase, then they would be at 70% of the purchase price or as-is value. This would signal that you would have LESS down payment going straight into a conventional loan.

Sometimes to close fast or if you are buying from a wholesaler, it might make sense to finance with a hard money lender and then refi into the conventional loan but I would reach out to your conventional lender first to make sure it is necessary.  The last rental I bought I got a conventional loan and we closed in just 9 days. 

Hope this helps and reach out if I can do anything else for you.