Possible to get Hard Money with no money down??

52 Replies

Ok so i'm ready to get my first rehab underway, I've done enough research and it's about time that I pull the trigger. The only thing that holds me back is "MONEY". I don't want to use my own and the only way to go about this is to use HM.

HM lenders usually loan %65 ARV. So, lets say if I purchase a property thats well below ARV - Repairs - (holding cost) "I know this would have to be a steal" will I be able to secure HM w/o any of my own money?

This is something im also curiouse about

You at least have to have earnest money. Also a good idea to have an inspection for your own peace of mind.

Hard money is not forgiving on rehabs; you need to be spot on rehab costs and complete it on time.

If you have doubts about rehab costs then pull in a mentor or wholesale to one so you can get educated on estimating the rehab.

Great advice Chris, Thanks!

HM lenders require skin in the game so you can't "walk away" if things don't go the way you expect.

Most require points up front.


Phil - can you please explain how points work.

Talk to at least 3 HML's to find out your market.

Skin in the game is based on the deal. The closer you are to ARV the more risk for the lender.

Find a good deal to lower the risk.

Short hard truth is 99% no, as a new investor with no track record to recieve 100% funding from a HM source will be next to impossible.

Now notice, I said 99%, and next to impossible.

Theres 2 levels of HM lending; institutionally where it's some HM business that you have no connection with, possibly find online, and in my experiences these have the most red tape and fees by far. Then theres the interpersonal HM lenders. These are still a business, although generally a small one, where there is some personal tie, like a mentor has connected you to them and so on.

Myself, I am always on the lookout for new HM sourcing, although have never found one that compares to my interpersonal one. My red tape consists of a 5 minute phone call. I do not pay the laundry list of fees as others list.

I receive this because I was personally referred and connected by an accredited investor, and had a strong track record behind me. That took the place of some "skin" in the game. That said, I still cover all my rehab funds, that "skin" I still need to bring.

I have heard and read others state theories how a person can receive 100% funding of everything in total, I strongly doubt the validity of those claims beyond theory, strongly. Defenently possible to do on a hold, but on any kind of flip beyond wholesaling, I don't see it happening.

If ready to start, like any good thing, you will have to start at a lower level, work hard, and build up to greater heights. Network with a really good local investor, make a deal to JV or bird dog to start, you will gain knowledge, money and have the capabilities to actually get in the game. I know for me, I do not seek people but if a newer investor approached me in my area asking for a similar start, I would be for it.

Hard money works a few ways. If you have a track record with a lender you can sometimes work out your own deal. If working with a new lender you will have to go by their structure. I structure hard money purchases to buy property myself. If your looking for money to purchase and repair a home for resale you can do a it a few different ways that I do:
1. Make sure to borrow enough to cover the purchase and repairs along with the private lenders origination fees, insurance and closing cost and some holding cost. For example: You find a house you can buy for $20k, rehab of $10k, closing cost, $1k, annual insurance $500, loan origination fee of $2,000. Now your all into the home for $33,500 and the home should have a market value of around $60k. You sell the home for $50k and everyone wins. A HML should not have an issue with a deal like this. Keep in mind all HML also charge a monthly interest only, typically 1% per month. Good luck, this is what I do.

I loan money in San Antonio, Tx and do it without downpayments all the time. The question is; is the collateral well worth the risk of the loan. I'm not sure of how other hard money lenders judge a loan, but, that's how I judge a loan.

Look at this from a HML's point of view. Let's say you find a house for $32k with an ARV of $50k (roughly 65%). If the HML lent you the $32k, how are they protected? They just funded 100% of the property's present value. If you walked away or dropped dead right after closing, how will they get their money back? Even if they could get another buyer to pay $32k for the place, after seller's costs, they'll be in the hole.

So they have to have some assurance you're going to get the place fixed up and raise it's value to $50k to adequately cover their loan. Do you have the money for the rehab? Do you have solid evidence documenting your experience in rehabbing homes? The ARV value is only relevant if the HML is confident you can renovate the property.

Now if you can get that property for something like $15k, an HML might play ball since the place is worth $32k as is.

Not sure if someone answered this or not, i didn't see it, but a "Point" is 1% of the loan amount. Sometimes you can build it into the loan and pay it on the sale of the property, sometimes they want it fronted.

100K loan, 1 point = 1K

The bigger hard money lenders have protocol to follow to protect their investors and the make the money off the points and give the interest to the investors pooling money with them.

Not an expert on this at all it is just what I see.

The individual hard money lenders have more leeway in making the call because it's all of their money and not on behalf of someone else.

The collateral mentioned is very important as well as what is the foreclosure rights and time lines for the state you are loaning hard money in??

You could have great collateral value but if it takes a long time to get the asset back it could deteriorate further in value and get damaged.Also the money wouldn't be bringing a return in default.


i am stating that if the wholesaler is in the home for a max of $32k and the home is Worth $60k, but they decide to sell it for $50k for a quick sale, there is about $28k from the price to the value. In a worse case situation the HML takes back the home for $32k and they resell it themselves as it should be very easy to get their money back and then some.

Sorry Curt, but I disagree. Once the home changes hands for $32K, its unlikely you'll turn around and sell it for $50K. You've now established a value that's going to be tough to argue with. Homes that are truly worth $60K rarely trade hands for $32K. I suppose that happens once in a while, but rarely. More likely is the home is worth $60K once fixed up and without that investment, the value is significantly less.

Points never did get fully addressed. Points come off the top.

Lets work a deal and see what you need to do a deal with no cash of your own. This is just about impossible.

ARV is $100K. HML will lend 65% at four points and 15%. HML was't monthly payments. You need to hold for six months to close a sale.

Loan is $65K.
Less four points ($2,600)
Loan proceeds $62,400
Various loan fees: $1,000
Property closing costs: $1,000
Up front costs (inspection, insurance, utility fees): $500
Six months interest: $4,875
Other holding costs (utilities, mostly): $600
Left to spend on purchase and rehab: $54,424

In other words, 55% of ARV.

That's a SCREAMING deal. That's VERY tough to find.

The bigger downside is that if anything goes wrong, e.g., you go over budget on the rehab or it takes longer to sell, then you're totally out of money and you lose the house. Actually, that doesn't matter to you because you have nothing invested. But the HML doesn't want this and won't let you get into this position.

So, even if you can buy and fix at 65% (or, whatever the HML will loan you), you need another 10% (minimally) or 15% (to avoid surprises) of your own cash to complete the deal.

A savvy HML will want your cash in up front. You may have to bring some of it to closing. You'll probably have to pay for labor and materials and then get reimbursed by the HML.


I respect your opinion but this is what we are doing in Memphis all day long. Many markets might not be as good as ours but this is how we have been doing it for years. It comes in part with relationships with banks and getting low prices.

The problem (or left out info) as I see it with Curt's response is that if a lender must "take back" the property, they must do so with costs involved, i.e. foreclosure costs as well as the time lost. Then they have re-sell costs and closing costs and would likely have to sell at a large discount to get out quickly. With that all said, that so-called spread would vanish in a heartbeat and likely end up with a loss to the lender, especially when considering the time value of money (opportunity costs).

I think you will find it hard going to find a HML to provide 100% financing. Your better alternative is to find a money partner or a private lender (friend, family member, associate, doctor, dentist, attorney, anyone you may know who would have liquid funds) and borrow from them after providing to them a fully laid out plan with all the numbers and the worst case scenario played out. if you can not get your lenders pricniple and interest paid out in a worst case scenario, you have not contracted a good enough deal in my opinion.

Curt, I have to agree with Jon, Mitch and Will.

The house will be worth $60,000 when the rehab is finished. A lot can happen between the rehabber getting a HML and the date the property sells to an end buyer or wholesaler.

@Mike N, IMHO, it is possible for someone to get close to 100% HML IF that someone has a long history of successful rehabs funded by the same Hard Money Lender and is in a market that every indication says will head up for the next year.

For someone with no experience and no money (skin in the game), find a partner. End of story.

Though I didn't start this topic, thanks for all the great replies. I'm in the latter category, I have good experience in rehab & rent, though not a lot & I've run out of money (except for my contingency fund). I want to keep moving forward, but was worried I would may have a hard time finding funding. This gives me hope.

Some great answers above.... I still need to go and vote for them, however its hard to find a wrong answer...

The reality to the answer lies in the type of HML and The likelihood of sustained or increased future value after rehab.

Which is why i always look at the "AS IS" value over the ARV value. ARV will get you in trouble.

There are mainly two types of HML. Those who lend others money and those who lend their own. I have found that when lending their own that this type is much more flexible to a full 65% value loan and even allows for cash outs at purchase. The reality is that they want you to default although wont say it. Their loaning 65% minus posts and fees is a great way to acquire property for themselves. Unless the market turns and then this type tends to be crushed a little faster.

The "skin in the Game" HML is typically brokering funds from a group or individual and their personal reputation is more on the line and they seem to be less likely to foreclose. Not that they won't Just not necessarily their business model. And I have also seen this group allow a cash out however it is only typical if they are loaning under a 50% position. Or if they have a track record with the borrower.

As for finding these people, and some hide well, have conversations with Title Managers from the local title companies. The title manager will know the HML well.

Good luck

Ok So I've talked to two HML's today, one will lend up to 90% of the purchase price and the other will lend 65% ARV. With that being said, is there anyway that I can work a deal with two HML's?

Lets say I have a property with an ARV of 100k, will I be able to borrow 27,900 (90% Purchase price) from the first hard money lender. Then borrow 34,100 (rehab plus holding) from the second hard money lendar to rehab the property?

ARV of 100k
Purchase Price: 31k
Rehab: 30k
Holding: 4k
Total Money in: 65k

I know i may number may be a little off but help me out a little bit with the concept.

Almost certainly no chance of getting two different hard money loans. Most will only want to be in first position. And the first position lender may forbid any second position loans.

It appears you are buying a property for $31K that has an ARV of $100K. And you need $34K to fix it up. Can you borrow 65%, that is, $65K from the second HML? Or, does that second one want some of your skin in the game, too?

Mike -

Take Jon's advice and approach the lender that will lend at 65% of ARV. If you ARV calculation is correct and the lender is comfortable with your abilities to complete the project, he very well may lend the full amount to you.

I have never heard of a HM lender accepting second position, just as Jon said, and I do not know of very many new RE flippers that are able to secure 100% financing in a deal.

This may seem unreasonable, and I know it does not fit every investors' situation, but if I had to do everything over again, I would use some of my own money on every project. I have found myself in trouble on deals where I have no vested interest and yet, when my own money is on the line, I have never had a problem. There is definitely something to be said for having some accountability to yourself on a deal and that tends to help us think very clearly.

Good luck on getting the funds you need!

mike, you really opened the door to a slew of hm info! lots to consider, right?
just wanted to wish you well on your 1st rehab, and hope you'll share more details about your progress and success as it unfolds.

best success,

Borrowing hard money will be different depending on if you plan to wholesale as opposed to buy and hold. When I am buying to property yo hold for personal investments I am not into the home for more then 65% ARV, when getting HM for wholesale it works different.

@Kevin When borrowing HM for flipping, I would borrow enough to purchase and rehab the home and would be all in for $32k in my example so the home would be rehabbed and then worth the $60K then. That was my example.

Our company might do it different then Jon or Will. We have found a system that works for us and its working very well.

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