Good morning all!
I was pondering through ways to approach various leads I have received through Direct Mail campaign and figured I would throw a few questions out to BP for experienced lenders to give their take on. I feel the answers to these questions will provide solid ground for any newbie who is thinking "what should my next steps be".
1) How much should a new flipper expect to come out of pocket for when doing first couple of flips? (Typical Points/Interest and up front downpayment)
2) What is the process like when the borrower is needing a draw to pay for work completed?
3) After how many flips with a lender should the borrower expect to receive more lax terms? (Less out of pocket cash)
4) What are mistakes you have seen from Flippers you have dealt with via Hard money loan?
5) How can a blue collar worker with low to no personal assets/income work around this dilemma to obtain Downpayment for Hard money?
6) How often are interest payments wrapped into balloon so there are no out of pocket charges to borrower during construction/market for sale of property?
@Jay Hinrichs I was hoping you can answer a few of these given your background as a lender & your overall REI experience.
ALL COMMENTS ARE WELCOME!
10%, but 0 if good deal. Except your carrying costs.biggest mistake people make is not asking for enough money, not calculating for unknowns and not having enough reserves, usually 3 months worse to cover carrying costs. Number one reason people get rejected. Only really need one deal some require more. 3.5% origination fee, 9 to 12 points also depends on credit. Draws would go directly to contractors once their info is received. Many lenders are asset based, depends on deal.
As far as blue collar some wholesale some deals then use that to cover percent loan doesn't. Could even transactional fund some deals very low percent and no points. I transactional funded and co wholesaled some deals before I started flipping to have money. I was broke as a joke at the beginning. Not a lender but done enough deals can do blindfolded. Just added more lenders 100% purchase and rehab along with holding costs. Not carrying costs though. I know several that hooks up newbies. My first lenders cane from a local networking group.
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