All Forum Posts by: Ann Bellamy

Thanks, @Enis Shehu!

Much of the reason that HMLs won't lend when you intend to move in (even down the road) is the lending laws.  Dodd Frank changed that landscape signficantly.  If you intend to live in it eventually, then in most states you must use a residential lender licensed to provide residential loans.  Residential loans have lots of compliance requirements.
Most hard money lenders are not licensed, and don't want to deal with all the requirements to provide a residential loan.  There are many more restrictions involved.
In NH, for example, the use of the funds determines the requirements for a residential or commercial loan.  If the funds are to be used to buy a property for personal or household use, it must meet all residential requirements.  
So the end result is that HMLs won't lend if you ever intend to occupy.  And you likely will sign paperwork to that effect, perhaps repeatedly.

The comments about the HML not wanting your property are correct.  They'd rather have the extension fee.  More money for less work, and foreclosing is expensive, a hassle, and the results are not guaranteed.
As for refinancing in your LLC, you are talking to residential lenders or residential lending departments.  You are probably asking to speak to someone about a mortgage or deed of trust.  Ask to speak to the commercial lending department of a local bank or credit union.  Totally different.
However, if you still have time on your hard money loan, simply work hard to sell the property quickly.  Make sure the price is competitive, or slightly under valued.  It will sell quickly and that will be cheaper than refinancing or paying an extension.  And you will have learned a ton.

Originally posted by @Arturo Romero:

@Ann Bellamy I am in California but would like to invest out of state.

When I’m ready should I contact hard money lenders in the state I’m currently in? Or the state I’m investing in?

The first thing is they have to be willing to lend in the state where you are investing.  And local lenders are always faster and more market savvy than national lenders.    So the state where you are investing.  Unless the lender won't lend to out of state borrowers, which happens also.

There is no "typical." All true hard money is uber-local. Find lenders in your area and ask them. You might find local lenders at your local REIA. You can use the search function here on BP and reach out to lenders in MS. When you use the hard money directory, try to find lenders actually located in MS and not the national lenders. I think with low housing prices, you need to find lenders local to you who are suited to your market.

You'll have better luck if you edit your profile to indicate your location, and mention in your post where you are seeking deals.  Any prayer you have of getting a hard money lender to take all the financial risk will require that you talk to lenders local to the area you are working.

@Kenneth Yuen, you generally can't get a hard money loan for an owner occupied property.  You need a licensed residential lender for that because of lending laws.  I know of only one in MA, I'll connect you if you PM me with your email address. 

Personally, for my first transaction, I would find a multi in livable but dated condition, get conventional residential financing, and renovate as you have vacancies.  You will get the best financing possible, learn way more than you ever expected, and gain cash flow and equity slowly.  Or you can wait for the inevitable market correction and buy then.  (But who knows when that will finally happen?  After 2020, I expect.)
 

Also, rates and terms from local hard money lenders are regional/local, and are based on supply and demand.  Your profile doesn't state your location, so there is no way for a local-to-you lender to jump in.

Well, there actually is a potential problem, but only if the tenant goes bad.  There used to be, and perhaps still is, a NH statute specifying that a landlord can hold only 1 mo rent in advance and 1 mo security in advance, and no more.  That means that potentially you are holding too much money.  Then if you end up in court with him down the road, you could be in trouble.  Although, frankly, having a responsible tenant is a good problem to have.

In the past, if I received an early payment, I would hold the check and not deposit until the due date, although that may no be enough to satisfy the letter of the law.

I'd talk with him, and see if his reason is because of the way he gets paid at his work, and see if you can work out something that satisfies his setting aside the funds, without causing you to be in violation of the laws.  Like a separate savings account in his control for him to deposit his rent money into, with a bank transfer on rent day, or something like that.  

It depends on the reason:

1.  If it is title issues, then you shouldn't want to close, and your contract should stipulate that the seller has 30 days to fix title issues without any penalty to you.

2.  If you were slow in getting the lender what he needed in order to complete his evaluation, then consider that it may be your fault. (Not saying it is, I don't have enough information to know that, just bringing up the possibility.)

3.  The lender is small and he committed to the loan without having the actual funds fully available in his account (waiting for another payoff, or waiting for one of his investors to fund, etc.)

4.  The lender is in the business of taking junk fees without actually closing a deal.  Did you pay him an application fee or some other fee up front?

5.  He's just disorganized and didn't transfer the funds from some other source in time.

6.  He's out of money and was committing to deals he didn't have the funds for in the hope that he'd have the funds by the time he needed them.  These are usually small lenders.

Suggest you find another lender LOCAL to you with a good reputation from other borrowers in your area.