Purchasing first property in Philadelphia, PA or Baltimore, MD
I am looking to purchase my first property, I have yet to obtain the property- however I am interested in buying and flipping. I am currently deciding how to fund the property. My husband and I have 49,000 from personal savings to invest however I have been communicating with a successful REI who offers hard money loans to those in need. This particular investor wants you to have at least $20,000 in your business bank account before they will give you a loan. I have a LLC and business account so that's not a concern of mines.His assistant stated they do not give 100% financing so that is why they require that amount, to cover the rest of what they will not finance. The interest rates are anywhere from 8-12%, I feel that is on the higher end. My and husband and I have good credit each but I really want to avoid using personal credit to take out loans. I am in the midst of building business credit so I expect to have cash credit cards for my business by the end of the year. I was attracted to this lender because there are NO hard inquiries on your personal credit report and they do not list this loan on your credit unless you default and stop paying on the loan. I was thinking we should just use our own savings to fund the entire project but then I am worried there will be hidden cost our savings cannot afford so I thought taking out a loan to help will be best. What should I do? What is the smart decision in the end that may cost less and have a greater profit? We live in Florida but I am from Philadelphia and find the houses are extremely cheaper than the ones in Florida.
@Shi Fallon I borrow 2-4 loans a month from private lenders and hard money lenders. You need to shop around and start a relationship with a lender. Eventually you can pick up the phone and the lender will gladly finance 100% and quickly once you build a good successful track record.
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Real Estate Agent
- Deacon Hoover Real Estate Advisors
@Alex Deacon
Thank you. That's great advice, I will start to shop around! Do you ever self finance any of your investments? If not, do you feel loans take away from your profit from the property? Are the loans visible on your personal credit report?
@Alex DeaconThank you. That's great advice, I will start to shop around! Do you ever self finance any of your investments? If not, do you feel loans take away from your profit from the property? Are the loans visible on your personal credit report?
Typically hard money loans do not appear on your credit report (unless you are foreclosed on) since they're not in the business of reporting credit, but they will pull credit as part of their underwriting, so you will have a hard inquiry on your credit report.
I've always used hard money for all of my deals. I treat them like a 2nd partner because they watch out for me and are essentially a 2nd set of eyes to vet the deal, which I do recommend you have on your first deal (but it doesn't necessarily have to be your lender).
8-12% is pretty standard for hard money. I think you may be used to conventional loans, but hard money is normally 2-3 more expensive. The tradeoff is a faster closing, easier qualifications, and less headaches than a bank.
@Shi Fallon when starting out its not a bad idea to self finance your first few deals to keep your holding costs down. Eventually you will grow out of that and start leveraging your finances using equity you have in your portfolio and using banks and private lenders
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Real Estate Agent
- Deacon Hoover Real Estate Advisors
@Nghi Le Thank you! This gives me a different perspective!
@Alex Deacon Thanks a lot, for your insight! I appreciate it..
Try out dohardmoney.com
@Chris Powell Have you used DHM? I have read mixed review on them. I've called and they sound extremely helpful
I'm using them now and its a good option starting out,they have all the resourses and they help you along the way.The financing is fair and they are very imformative.