Hard Money Analysis Reality Check
Hey BP! I am looking at hard money as a way to fund my next BRRRR deal. Although I am familiar with conventional and personal loans, hard money is something I do not fully understand yet and would welcome any help in making sense of my numbers.
Deal by the numbers...
Duplex (2/1 each side)
Purchase price: $51,000
Appraised value: $62,000
Rehab: $15,000
Loan to Cost (LTC): $66,000
ARV: $82,000
Hard money lender offering the following terms:
75% of LTC... assuming $49,500???
100% of construction costs
65% of LTARV... assuming $53,300???
10.99% IO on full loan balance for 13 months
2 points ($990), plus 6-months IO ($2,571.66) in reserves required
I am planning to use private money for the $15k rehab.
If the HML is willing to fund 75% LTC, do I simply need to bring the balance, plus points, escrow reserves, closing costs, to close the deal?
Assuming:....
$49,500 max LTC
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$1,500 difference between purchase price and 75% LTC
$990 points
$2,571.66 IO pmts (6 mos.)
$2,500 closing costs
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Cash to close: $7,561.66
Does this look right or am I missing something?
Are HML transactions considered cash purchases for the purpose of refinancing to a Freddie/Fannie loan in six months?
Thanks in advance for your help!