All Forum Posts by: Cameron Rockwell

@Joshua Benjamins Thanks! Yeah I’d say I have one of the best mentors out there!

#homeportcapital

Hey @Jason Capers

You shouldn't have a problem getting a proof of funds letter from a hard Money lender. That is usually where the HML is first introduced and it is totally legal to use a proof of funds letter from them as long as you are giving them a first lien position on the property. If you are not actually intending to use a hard money or private money lender/are not actually obtaining funds from them I would not recommend this. Hope this helps.

@Syed H. I work with a hard money lender and see tons of 100% financed deals produce plenty of income. Now if you are talking 100% loan to value that is a different story. All I am saying is instead of saying an idea is stupid why not give them some valuable information about how one of your deals went bad. This is not a forum to post opinions of what you think is a good strategy and what isnt. You have tons of experience why not use it productively instead of telling someone its stupid without giving any explanation why. That is the actual purpose of the forums. 

@Syed H. Sounds like someone hasn't had a great experience with hard money flips. Instead of spreading negativity and telling new investors it is "a stupid idea" maybe just don't comment on a subject you have little to no information on. 

Hey Ben,

I currently work with and learn from a Hard Money Lender in the Virginia beach area. Based on the questions you are asking I think you are mixing up hard money and private money. Private money is anyone with their own money that they want to lend to you for a higher return then they would get from a bank account. The terms of these loans are usually 5%-10% and the lender does not need to have any experience with real estate. For example I use my grandfather as a private money lender and just give him a first lien position, just like i would a bank. This is something you could use to leverage a down payment and just pay that back over lets say a 5 year term but that is up to the private money lender. They are usually a lot easier to negotiate with. A hard money lender is usually someone who has done flips or BRRRRs before and really knows the business. Their terms are usually 10%-15% and do not typically go past a year. My HML for example only lends out up to 6 months and then the interest rate doubles. That is definitely a situation you do not want to be in. I would recommend getting an experienced agent and a contractor you really trust before moving forward with hard money. You should also have some cash saved up to mitigate risk if things go bad. But to answer some of your questions.

1. Hard money loans are generally structured by them taking a primary lien on the property for a 2-12 month term, You will be required to pay interest on your loan amount either monthly or at the end when you either decide to sell or refinance out of it. This is where Hard money and Private money are different because they all play into different strategies. 

2. Hard money is typically only used for properties you are trying to rehab because the goal is to increase equity so that you can make money when you cash out. (Sell,Refinance) Hard money is not going to be used for a property that is already move in ready because there is typically not enough added equity to cover the high interest rate. If you plan to use private money to fund the down payment so you can get a traditional loan that is a strategy you can look into. 

3. Hard money lender will only fund the entire purchase and repair budget if it is less then 75% of the ARV (After Repair Value). This is insurance for the lender because he can ensure you make enough money to cover the interest while also making a profit. It is important to note that a hard money lender is on your team. Like David said he wants you to be successful so that you can come back and do more deals with him.

4. The refinance is the most overlooked portion of the BRRRR in my opinion. You want to make sure that the bank will actually approve you for a traditional loan. They also will only cash out 70%-80% loan to value because they need some equity. Think of it as a traditional mortgage. Most of the time you need a down payment to pay into that mortgage. Well when you need to refinance instead of you putting money down they simply just give you less money. That is another thing to budget for as if your calculations are off you might not get all your cash back.

Based on your post it sounds like you need to do some more research and assemble a good team before you get into hard money. I would start by trying to buy your first primary residence or first rental and just feel everything out. I am not saying do not take action, just work your way up to it. I am 23 years old so I know exactly how it feels to be excited. I would love to connect and share some stories about my first couple deals.  

@Arrianne Craig Jolla I would just do your due diligence and research on HML terms and make sure you have a team in place. Conducting your first BRRRR relies heavily on your contractors rehab budget and the ARV generatred by your agent. You will also need to make sure a bank is willing to refinance. I've heard a lot of banks are only refinancing to 70% LTV so just do your research you got this!

@Anthony demichael Unfortunately we only do local deals but I'm sure you can use bigger pockets to screen hard money lenders. If you go to the networking tab. Good Luck with the process!!!

The magic is in the deal. If you are trying to buy a turnkey 4plex you can just find a partner or see if you can get a low interest loan from family or friends. However if the 4plex can be rehabbed and refinanced you could look into hard money. I typically don't recommend hard money to anyone without a solid team of people but you could look into finding agents and mentors that can help you with that. 

I bought my first rental last year. Overall I have found it most important to work with an investor savvy agent. They are very suited to helping new investors and most will cross check your deal analysis to make sure you really are buying a good deal. I'm under contract for my second right now but finding an investor who is willing to help you along the way was critical for me. 

Hey Anthony,

Depends on what you mean by 100% financed. Typically hard money lenders look for a 50%-70% Loan to value deals. This means that adding the purchase price plus the rehab costs it should be at most 70% of the After repair value. If you can find a deal that meets the 50%-70% you shouldn't have a problem getting the entire purchase price and rehab financed. The lender I work with requires you to pay at least $8,000 of the initial rehab costs before doing a payout. I covered this by just using business credit or a partner to fund that amount. What is great about hard money is you can be very creative. I have even seen people use hard money and private money to fund deals with truly 0 money down. You just need to make sure that your profit can pay off all the interest. It is also important to look at the terms of the hard money lender and whether or not they require you to make interest payments each month. Hope this helps and good luck.