Searching for a Hard Money Lender

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Searching for a Hard Money Lender

Suzanne Carden
El Paso, TX · Member since 2016 · 4 posts · 0 votes

I'm looking to acquire real estate through a hard money lender who will lend based on a percentage of the appraised value.  In other words, I'm searching for a lender who provides equity only loans, based on the appraised value (3-5 years, amortized over 30 years).  This may be an interest-only or high interest loan.

I am not referring to a refinance, or getting equity out of my home, but a purchase based on value.

In other words, if I were to purchase a $1.2 million home and a lender sent out their appraiser to appraise the property. Say it was appraised at $1.9, for example. The lender I am referring to would loan a certain amount based on the appraised value, generally 70, 75, 80... up to 100%.  These loans are not based on the purchase price, or down payment, FICO score, or anything else, they are based solely on what they will lend toward the appraised value of the house.

Does anyone know of any lenders who will lend based on a percentage of their appraisal amount?

I am looking at several pieces. Some lenders ask if I am going to live in the house or if it is for investment purposes. These pieces are for investment purposes.

Any other questions, please let me know. Otherwise, please be kind enough to advise of any lenders you know that lend based on the appraised value of the property.

Thank you in advance ;-D

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  • Jahnae Allen
    Lender · Orlando, FL · Member since 2016 · 36 posts · 6 votes
    10y

    I can definitely help you out. Shoot me a message and we can discuss the options further. 

    0Reply
  • Suzanne Carden
    OP
    El Paso, TX · Member since 2016 · 4 posts · 0 votes
    10y

    I would love it if you or someone else would help.  Please respond to my message?

    0Reply
  • Account Closed
    Real Estate Agent · Wesley Chapel, FL · Member since 2016 · 153 posts · 38 votes
    10y

    @Suzanne Carden The "Marketplace" tab here on BP has some HM lender options. If you have a mortgage broker, that person may have some recommendations as my broker did. Most HM lenders work the same. They may charge some points and will loan anywhere from 70%-100% depending how experienced you are and how much business you have done with them. Websites like LendingOne have an online preapproval app and someone will get back with you. I filled out an app late in the evening and the next day a rep contacted me. Some HM lenders will only lend out in certain states. You will find our all that information online. Good luck!

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  • Account Closed
    Real Estate Agent · Wesley Chapel, FL · Member since 2016 · 153 posts · 38 votes
    10y

    @Suzanne Carden Sorry, I left this out. 70% - 100% of the ARV of the home you want to purchase. There is plenty of information on HM on this site if you use the search BP option top right of the page.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Suzanne Carden  highly unlikly this would work.. this is what brought down the RE market the last go around... no cash into the deal and phantom equity.. if your paying 1.2  thats what its worth.

    lenders will look at loan to cost on that high of value property

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  • Lou Metore
    Wholesaler · New Orleans, LA · Member since 2016 · 13 posts · 4 votes
    10y

    Hard money lenders should probably be your very last resort.  Most of them aren't even worth the trouble to contact.  

    They have ridiculous terms, charge ridiculous interest rates & ridiculous points & all kinds of other ridiculous things that they dream up.  Then on top of that, their application process is a total joke.  

    They will ask you for millions of details, that you probably don't have & even if you did, would take dozens of hours to gather up.

    Then when you ask them to provide that same information to you, so that you can vette them, they will say things like,  "Oh, if you are barking at all of these ridiculous requirements this early, then you probably aren't loan wothy, blah blah blah. Of course all of which is nothing but BS.

    If you don't believe me, just ask them to provide you with the answers to the same questions they are asking you.  Watch how fast they start to throw out all this BS. 

    I'd even go so far as to question how much money they even have to lend out.  Some of them probably don't even have the money to loan in the first place.  Some of them that have no money are just looking to broker the loan & you have no idea if their source is even legit.  You may get all the way to the closing only to find out that there's no money to close the deal.

    Most of them will also try to box you in with short repayment periods that are difficult to achieve & if you dont repay within that time will charge you ridiculous penaties or want a large percentage of the deal. 

    For the record, I've never once borrowed money from a hard money lender, but I do know some & I did look yinto it a while ago & can tell you that you are better off not dealing with them. 

    If I was you, I would seek out a small local bank & try to obtain a commercial loan for each property you want to buy  .

    If you can't do that then I would seek out private money from somebody that you know or know of.

    I would also strongly suggest trying to get the owner to finance if you can.

    There are lots of ways to get money, but hard money lenders should probably be your last choice.  At least, the majority of them.

    Good luck!

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  • Suzanne Carden
    OP
    El Paso, TX · Member since 2016 · 4 posts · 0 votes
    10y

    Still looking for an aggressive lender to purchase several high-end properties.

    I need a lender that will lend against the value of the asset, not the the purchase price.

    Thanks for any information you can provide.

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  • John Thedford
    Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
    10y

    @Suzanne Carden

    Sorry I have to agree @Jay Hinrichs. He is an old pro in that lending space. I am a new guy with 4 years of lending. A lender is going to want to know:  what do you have to lose. If you put in no money, what guarantee do I have you will pay me back.

    This reverts back to the no money down stuff that has been promoted forever. In some instances, no money down can be found but probably not in high end properties but rather D class properties, motivated owner just wants to walk situations.

    I do private lending in FL. Here is what I want:
    1. skin in the game. My borrowers put down 35%. Even then some have defaulted.
    2. good character of the borrowers. I check them out before I give them a dime.
    3. good collateral. High end properties are good collateral, but what about skin in the game?
    If they cannot meet at least these 3 criteria, I cannot help them. What can you bring to the table to convince a lender? 

    Last but not least, generally speaking HML is expensive. It is meant for short term fix/flips..not long term financing. My general terms are 1 year no prepayment penalty.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Lou Metore  I think your response is accurate for the millions of joker brokers running around the US.s. those that are just crooks IE Due diligence pump and dump... to folks trying to broker deals just like you allude to.

    however a good LOCAL HML can be a valuable asset.. but this is someone you can eyeball and create a relationship with just like a private lender.. Private lenders are just that private and its all about personal relationships.. I have seen folks try for years to find these mythical private lenders and never do a deal because they can't raise a dime.

    what the OP is looking for is an asset based lender.. and those are not very common anymore.. especially if you have to find one on the internet means you don't have a track record and have little to no chance of finding anyone who is going to 100% your deal.. unless its just such a low LTV that they are making the loan with a better than 50% chance of owning it when the borrower can't pull it off because the borrower is not experienced and can't execute. for instance like In this case when the OP says the property is worth 3mil and she is buying it for 2.6 I would look at this in the sub 1 mil range personally. knowing that I have a huge up side if this person does not pull it off and I would NEVER loan on it.. I would only do the deal if I had direct control.

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