BRRRR and Hard Money Lending
Hey BP people!
I am in the process of relocating to Northwest Indiana into my first house-hack and I want to start BRRRR investing in that area as soon as I get settled in. Most of my uncertainty is around the hard money lending process. If anyone that has used a hard money lender for this purpose can help clarify a few things, I'd greatly appreciate it!
-Is there some type of pre-approval process similar to a conventional loan? Or do I need to have a property under contract before reaching out to a hard money lender?
-How soon can I expect to receive funds from them? I'd love to offer a quick close for distressed sellers, and I'd hate to jerk sellers around making a cash offer before I have the funds and then something go wrong.
-Can you tell me some typical terms you have experienced? Interest rate, repayment period, etc.
I have been learning a ton from you all! Thank you for any insight you can offer.
Most Popular Reply
- Yes, you will need to complete an application and the required lender forms before they issue a preapproval.
- Closing time varies from lender to lender, and you may pay more for speed/lack of experience. I have been funded in 4 days however I know lenders that can do 48 hours and others that need 14 days.
- I think a solid margin for 90% of lenders is 8-12% interest 1-3 points and 6-18 month loan. You may get a high term for your first deal, but as you continue to work with that lenders, your rates and terms will improve.