Oak Lawn, IL · Member since 2015 · 22 posts · 8 votes
So I just got off the phone w/ a Rep from dohardmoney. (A HML on biggerpockets site for IL). Has anyone used their service? How was the experience for you? As a new flipper with limited funds, you all know the frustration w/ trying to start out, so I'm looking at different options. Any opinions on dohardmoney is appreciated!
Here is what I understand about their program.
You have to put $2500 ($650 of that for 2 appraisals of property). The $1850 remainder goes back to you after you sell the property. After you put in an offer, they send out 2 different evaluators to see if the deal is good. If they approve it they provide you with $250k per property (you have access to a total of $750k). It's 100% financing. No loan payments required. Rehab and sale needs to be done w/in 5 months, or more fees will apply. You take the profit, and they charge 15% (annual rate). They loan up to 70% ARV for repairs. After that it's out of your pocket.
Each time you have a property evaluated you have to pay $650 to get the OK from them. An obvious problem would be if they just keep saying NO, and you fork over 5k in 'evaluations' to get one funded.
They only let you do one repair at a time. For example: You need to do the roof. You let them know you are doing the roof, and they give you the funds. Next, Siding.....and so on....Not sure why you have to do only one repair at a time (seems inefficient).
They provide a Professional support during the journey, proof of fund letters, and other resources....
Hard Money Lender · West Jordan, UT · Member since 2015 · 105 posts · 75 votes
10y
Hello Brian – Happy to see you on Bigger Pockets!
If you would like to see what people have to say about us you can check us out on YouTube, or read some comments here on Bigger Pockets.
To address your concerns and the additional comments within this thread:
I am afraid there may have been a bit of misunderstanding as to being able to only do one repair at a time, because that is not the case. If needed we can provide a 10% advance as the first draw to help you get started and then we reimburse you for rehab expenses as the work is completed. Using the draw system you can do as much work as you can and then we can send an inspector to confirm that work has been completed. Typically investors will break up their project across 4 draws. We want to help you be successful, which means you need to get the rehab done and the property on the market as soon as possible.
As to someone repeatedly submitting deals that are being turned down, we don’t want that to happen either. For this very reason we provide our customers with access to our Advanced Deal Analysis Software that allows you to know the details and the potential opportunity for every deal before we send evaluators out to the property. In addition to this we teach you how to personally value properties so that we’re not moving forward until you have confidence that the deal you’re looking at is a good deal. If you are taking advantage of the tools and education available to you when you join, as well as our great support team than continually paying $650 for evaluations on bad deals isn’t going to happen. We’re here to help you find and value properties that we’ll lend on.
@ Jeff Lezark I agree that with upfront fees can be problematic. Having been in business for over 10 years we know it’s more problematic for customers to deal with following challenges:
10-20% down.
Having Bad Credit
Lacking Past Experience
Lack of tools and resources to accurately value properties.
No options for Gap Funding
At our core we are a lender, however, we've learned from funding countless deals that making our tools and resources available to our clients allows them get into better deals and avoid bad deals. We know that our financing is not the best option for everyone, but for those needing this kind of help our program is a great fit. We offer 100% financing, which includes purchase, rehab and closing costs. We'll lend up to 70% of the ARV on fix and flip loans which allows a new investor with limited funds the chance to get into investing where they wouldn't be able to otherwise.
@ Cortney Newmans I quickly reviewed your terms and I would definitely agree that for the right investors you guys are a great option. What’s unique about our system is that we don’t require 20% down for fix and flips so while our points and interest are a little higher the barrier to entry is lower allowing someone who doesn’t have 20% down to get into the game.
Our evaluations are not merely appraisals. We use 2 independent, experienced local real estate agents that are familiar with your local area who will review all aspects of the deal to determine it’s potential. They run a market analysis, they pull three actives and three sold comps in addition to doing an interior evaluation of the property which allows us to establish a pretty solid After Repair Value.
Remember, we are going to be potentially funding 100% of the deal, so the risk is increased. Using 2 Evaluators to establish the ARV offers protection not only for us as the lender, but for the investor as well. I'm sure we can all agree that an appraiser can miss the mark and so having 2 objective experts establish the value protects your interests and keeps you from getting into a bad deal. Obtaining the insight of two successful agents makes sense for both parties. This is also particularly helpful to first time investors in helping them to understand what is and isn't a good deal.
Lender · Boca Raton, FL · Member since 2015 · 84 posts · 41 votes
10y
Something doesn't smell right. The most common loan scams involve paying money before anything of value is given to the client. Paying for an appraisal in advance is legitimate but typical cost is $450 and only 1 is needed unless the subject property is valued over $1 million. Even then most of us only require 1 valuation. My advice is continue shopping. As for rehab dollars you should expect to draw based on a % completed. If you have to do 1 item at a time the lender will have to send an inspector repeatedly to the property at $150 per visit. Guess who pays for the draw inspections?
Investor · Atlanta, GA · Member since 2012 · 32 posts · 7 votes
10y
@Brian Barnes I would love to help you out. I think our program at Lima One Capital is simple and you want have to hassle with all the junk fees. Its is $400 for the cost of appraisals and $150 per inspection draw. Attached is a copy of our program. Let me know if I can help hout.
Oak Lawn, IL · Member since 2015 · 22 posts · 8 votes
10y
@jefflezark, Ya I was skeptical about having to put money up front, but seeing that I don't have to make monthly payments during rehab I look at it as a trade off. They said they use two evaluations to compare the numbers to come up w/ a final decision on the deal...Again, I'm new to all this so I wanted to throw it out there and get some opinions....
@cortneynewmans, I will look that up. I don't see an attachment. How do I view attachments here?
Forum Troll · Mesa, AZ · Member since 2015 · 17 posts · 6 votes
10y
I'm in Phoenix and have talked to several hard $ lenders recently; 3-5, and each agent I talk to seems to have one in their pocket. 11% interest highest, no upfront fees, 1 appraiser, no upfront fees, variable entry and variable exit time limits. Of course varies by local, but yours is way high and way strict; I have not researched other markets.
Hard Money Lender · West Jordan, UT · Member since 2015 · 105 posts · 75 votes
10y
Hello Brian – Happy to see you on Bigger Pockets!
If you would like to see what people have to say about us you can check us out on YouTube, or read some comments here on Bigger Pockets.
To address your concerns and the additional comments within this thread:
I am afraid there may have been a bit of misunderstanding as to being able to only do one repair at a time, because that is not the case. If needed we can provide a 10% advance as the first draw to help you get started and then we reimburse you for rehab expenses as the work is completed. Using the draw system you can do as much work as you can and then we can send an inspector to confirm that work has been completed. Typically investors will break up their project across 4 draws. We want to help you be successful, which means you need to get the rehab done and the property on the market as soon as possible.
As to someone repeatedly submitting deals that are being turned down, we don’t want that to happen either. For this very reason we provide our customers with access to our Advanced Deal Analysis Software that allows you to know the details and the potential opportunity for every deal before we send evaluators out to the property. In addition to this we teach you how to personally value properties so that we’re not moving forward until you have confidence that the deal you’re looking at is a good deal. If you are taking advantage of the tools and education available to you when you join, as well as our great support team than continually paying $650 for evaluations on bad deals isn’t going to happen. We’re here to help you find and value properties that we’ll lend on.
@ Jeff Lezark I agree that with upfront fees can be problematic. Having been in business for over 10 years we know it’s more problematic for customers to deal with following challenges:
10-20% down.
Having Bad Credit
Lacking Past Experience
Lack of tools and resources to accurately value properties.
No options for Gap Funding
At our core we are a lender, however, we've learned from funding countless deals that making our tools and resources available to our clients allows them get into better deals and avoid bad deals. We know that our financing is not the best option for everyone, but for those needing this kind of help our program is a great fit. We offer 100% financing, which includes purchase, rehab and closing costs. We'll lend up to 70% of the ARV on fix and flip loans which allows a new investor with limited funds the chance to get into investing where they wouldn't be able to otherwise.
@ Cortney Newmans I quickly reviewed your terms and I would definitely agree that for the right investors you guys are a great option. What’s unique about our system is that we don’t require 20% down for fix and flips so while our points and interest are a little higher the barrier to entry is lower allowing someone who doesn’t have 20% down to get into the game.
Our evaluations are not merely appraisals. We use 2 independent, experienced local real estate agents that are familiar with your local area who will review all aspects of the deal to determine it’s potential. They run a market analysis, they pull three actives and three sold comps in addition to doing an interior evaluation of the property which allows us to establish a pretty solid After Repair Value.
Remember, we are going to be potentially funding 100% of the deal, so the risk is increased. Using 2 Evaluators to establish the ARV offers protection not only for us as the lender, but for the investor as well. I'm sure we can all agree that an appraiser can miss the mark and so having 2 objective experts establish the value protects your interests and keeps you from getting into a bad deal. Obtaining the insight of two successful agents makes sense for both parties. This is also particularly helpful to first time investors in helping them to understand what is and isn't a good deal.
Oak Lawn, IL · Member since 2015 · 22 posts · 8 votes
10y
Thanks for the reply Jacque. I wish I would have spoke to you instead of the rookie rep I spoke with. He put me on hold numerous times to get answers to my questions so it rubbed me the wrong way. He just came across as unprofessional which made me weary. I'm researching different options but would like to chat again. If you could PM me your direct number that would be great. Thanks.
Chicago, IL · Member since 2015 · 298 posts · 261 votes
10y
I looked into using dohardmoney before but their terms and especially the upfront fee i don't think is worth it. There are plenty of other hard money lenders in the area that have better terms even at 100% financing. I have found a couple that do 100% but most do 90% of purchase and 100% of rehab.
@Nnabuenyi Anigbogu if you could PM me a few of the HMLs you have found with fair terms that would be awesome!
Brian... how funny!
Just last week I came across them and applied online... When I finally spoke with someone, like you, I didn't like how inexperienced the associate was and it was evident he was just asking me questions from a script which gave me little assurance he knew what to do with my hard money deal.
Personally, I like having someone local to my market who knows and understands it versus someone in a boiler room on the other side of the country who has no idea of whats going on...
Investor · Wilmington, DE · Member since 2015 · 55 posts · 19 votes
10y
Thanks for asking this relevant question so that we, as readers, can plug in and see the different options with hard money lenders. @Tyron McDaniel I think you bring up a good point. Hard money lenders would better be able to facilitate deals/loans if they had a presence and understanding of the local market in which they are lending to. There are a few out here in the DelMarVa area, but I haven't found one that seems to understand the DE market, where I live currently, which makes it difficult to accept a hard money loan. But maybe that's part of the risk, huh? YOU should be the one to determine your market and whether or not it is profitable to take that loan or modify the terms. You know your market better than others, so own it and lead the HML into the deal that makes the most sense for them and for you. They don't want to lose money or watch you lose money, so explain how your market works and is operating and I'd bet they'd work with you. Self-revelation through responding to others, so I'll take my own advice and reach out again and study my market a little bit better.
Oak Lawn, IL · Member since 2015 · 22 posts · 8 votes
10y
I know they use local appraisers/evaluators to check out the property. I'm still on the fence. If I give them a shot I will definitely be posting my experience here.
The thing that bothers me is that not one BP member replied w a success story. Was hoping for some of that feedback.
Chicago, IL · Member since 2015 · 298 posts · 261 votes
10y
I agree with @Account Closed $650 for a BPO is crazy. For 2 of the hard money loans that i have closed on i was charged $200 to kick off the process. The $200 included the BPO and other fees associated with closing the loan (credit and background check etc). I closed on both loans but if i hadn't i would have been out only $400 and not $1300+.
Chicago, IL · Member since 2015 · 298 posts · 261 votes
10y
Originally posted by @Account Closed:
@Nnabuenyi Anigbogu we do appraisals, not bpo's as we really don't think that BPO's give you a true sense of property values (im not bashing realtors, my wife is one). Remember, if your end buyer is a homeowner, then the lending bank is going to do an appraisal not a bpo.. better to get a more realistic number on your appraisal to start.
I agree with that approach. Fortunately (or unfortunately) the HML i used did both. BPO to determine as-is price and appraisal to determine ARV. Unfortunately that dual approach bit me on one of the deals because they got the ARV i wanted but did not get the as-is value i needed. Since they lend based on both values i ended up having to bring more money to closing than i wanted (50k instead of 20K). However it was still worth it. Glad to see that is the approach you are using.
Hard Money Lender · West Jordan, UT · Member since 2015 · 105 posts · 75 votes
10y
@Ken Vesely and @Nnabuenyi Anigbogu, I agree with Ken too! $650 for one Evaluation is crazy. The $650 covers 2-3 evaluators going out to the property. It is actually more comprehensive than a BPO.
A quick review of Ken's terms and there's a couple of key terms that differentiate us from Ken. He requires a minimum credit score of 625 and 20% into the deal, plus 6 months in reserve and the ability to make monthly payments.
For the right investor those terms are a great fit, for the investor that doesn't meet those terms we provide a great solution that allows that investor to still get into investing. If @Brian Barnes can meet those terms Ken might be the better option.
We CAN and Do help investors with bad credit and very little capital to bring to a deal. For many it is the best option for them to get their first deal done.
Oak Lawn, IL · Member since 2015 · 22 posts · 8 votes
10y
@NnabuenyiAnigbogu seeing that we are in the same area, could you give me some names of the lenders you have dealt w/ that are doing 90-100% financing? Thanks.
Oak Lawn, IL · Member since 2015 · 22 posts · 8 votes
10y
I'm not either for or against dohardmoney yet, but what you guys keep forgetting, is that they are doing 100% financing, and no loan payments during the rehab. This being the case, I don't mind putting in 2-3k upfront. Normally you are putting up 20% plus..either way you are paying. My only hesitation is getting turned down for different properties that I know will work. Again, I am not for or against here. Just looking for input/facts/opinions. Playing devils advocate. So all your input is very appreciated. This will be my first deal, so I am trying to avoid making as many huge mistakes as possible. Also, being my first deal, the 100% financing is attractive for me, and I'm sure a lot of other rookies who have little to start with.....
Parkville, MD · Member since 2015 · 8 posts · 3 votes
10y
Brian,
If it doesn't feel right, don't use them. You have to really consider the risk of using private lenders in comparison to other sources of funding. If you use a lender no matter if they are private or institutional, get a 3rd party involved to make sure all business matters are on the up and up (Contracts are made to be negotiated and if their services are legit, they shouldn't have any issues with a 3rd or even a 4th eye in the mix to make sure everyone wins). Have your attorney work directly with their attorney and if they refuse, walk away. Simple and to the point.
You said in the first post that rehab and sale need to be done in 5 months or more fees apply. This seems like a red flag. 6 month+ holds are pretty average in IL for a flip. Houses don't fly off the market like they do in CA. I'm curious how much more the fees would be if it goes over 5 months...
Hard Money Lender · West Jordan, UT · Member since 2015 · 105 posts · 75 votes
10y
@Account Closed - should a borrower need additional time they can extend the loan by making interest payments, We allow up to 3 additional months in extension paid on a monthly basis. The max term is 8 months.