My wife and I just decided to start our very first flip. I am a retired Navy Seabee builder and currently work for a multi-site company as a Project Manager. we are looking into the HML vs Conventional loan. the house we are looking at is in a very nice area the comps in the area are good also. I guess my question is would it be hard to get a HML and how do they work? I was going through some of the information but don't fully understand if the HML % is based on the total loan amount or the selling price?
Just search the site for hard money - THere are thousands of posts and podcasts on the subject.
Are you able to get the property and close in 30-45 days? Then go conventional, it will be less stressful for your first deal
WIll you only get it if its a quick cash sale and you know you can flip it in 30-50 days? Than hard money might be a good option.
Contact a few hard money guys and meet them face to face- You will see education solves all.
Nick, thank you for the advice. I will contact a few of the Hard money lenders and set up a meeting to learn more about it. I'm not sure if the property would qualify for a conventional loan. It would need to be total rehab that's why I was thinking hard money loan. As for the time frame I believe I could get it done with in the 50 days as long as everything is in place, but if I know construction there is always something. I am a retired Navy Seabee builder. investing in realty has always been a passion of mine, I am looking to flip and even hold a few properties for my self to create that passive income while doing what I love best renovating old stuff and making them shine again.
Originally posted by @Samuel Gorgas :
My wife and I just decided to start our very first flip. we are looking into the HML vs Conventional loan. the house we are looking at is in a very nice area the comps in the area are good also. I guess my question is would it be hard to get a HML and how do they work? I was going through some of the information but don't fully understand if the HML % is based on the total loan amount or the selling price?
If you're intent is to flip, then I assume you mean purchase, renovate then sell. The majority of properties that would be profitable as a flip won't qualify for conventional loans. Conventional loan products are targeted towards move in ready properties, with the exception of the FHA 203K, which includes money for renovation.
Regarding Hard Money- General rule of thumb is many HMLs lend as a percentage of the After Repair Value (ARV) that covers the acquisition and purchase price. Call the HMLS and ask about their underwriting requirements, including rates, terms... Make sure you ask if they will work w/ a newbie.
@Crystal, Thank you for taking the time to answer my question. I will call them and ask them those questions. As for what my intentions in REI is wellI want to start out with purchasing,renovating and selling first to build some cash flow then begin to purchase some rental properties to create a passive income flow.so that eventually the wife and I would be able to retire from our current jobs and do this on a full time bases.
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