All Forum Posts by: Mark Munson

Hard money and private money are used interchangeably by most; and I would argue most use the terms incorrectly. Some hard money lenders call themselves private money, yet they are far from private. I would consider an individual lending you money out of a Self-Directed IRA or their bank account private; whereas hard money lenders typically are beholden to Wall-Street partners or fund investors and have underwriting guidelines they stick too.

You have to refinance a hard or private money loan because most of the time they are short term, like 6-24 months. They also are interest only and carry rates from 9-12% on average, with most hard money loans between 10.99-12% at the moment. There is nothing wrong with these loans and you never need experience to qualify, beyond owning your own primary or having another mortgage on your credit for at least 12 months in the last 2 years. If you go the route of hard or private money, never take a 6 month loan term. Any lender that offers that is doing that knowing you'll like need to extend and they'll hit you with another fee after 6 months. 

If you decide to just buy turnkey, rent ready assets; just know that you are foregoing your ability to scale faster by locking up too much liquidity in one deal. Unless your cash on cash return is significant, you'll certainly scale slower then you hope because you are passing on so many more profit centers in real estate, like the reinjection of capital through fix and flipping and the ability to BRRRR through fix to rent.

 Awesome! Feel free to connect if you ever need any advice, happy to help. 

Hi @Walt Viera

    The cheapest form of education is here on BiggerPockets and in your backyard by joining your local Real Estate Investor Association. I would encourage you to join whichever one is closest to you and avoid paying some "guru" money that won't yield you anything. 

Hi @Drew Corwin

You can utilize a website like Investor Lift to aggregate off-market deals. Most major wholesalers utilize the platform to dispo there deals or find deals to JV. For you, you may find a deal, but if not, you will find the contact information of people doing deals in your area. Call them up and give them your buy box and let them if they get a deal in that area, to call you first before they mass advertise it. Just getting on an email blast list achieves nothing, you are just seeing what has made it past the VIP buyers. Real estate is a relationship business, so call them up and create that relationship.

That is incorrect. It does not need to be leased. In the event the property is vacant, the lender will order what is called a 1007. That is a supplementary report with the full appraisal where the appraiser determines the rental value by pulling rental comps.  

Hi @Deane Leonard

The key to BRRRRing a property is purchasing deeply discounted on the front end. If you take a fix to rent loan, for example, and your loan amount is already at 70%+ of the ARV, you really have little to no room to pull cash out. In those instances, you have to look at other metrics like your cash on cash return to assess if it still fits your goals and bux box. Feel free to reach out if you need any advice.

Hi @Luke Crouterfield

You can explore hard money options and DSCR loans, specifically. You can get up to 80% of the purchase price funded and only have to bring 20% down. Those loans only look at your credit score and whether the property is cash flowing. Essentially, as long as the debt service coverage ratio is 1 to 1 with your credit, you'll qualify. That means that whatever the sum of the Principal + Interest + Monthly Taxes + Monthly Insurance comes out to be, as long as the rental income exceeds that then it will qualify. Also, if you did want to fix and flip or fix to rent, those loans lend you up to 90% of the purchase price + 100% of the reba costs (never exceeding 75% of the ARV), you can explore that too, even if you are a newer investor. Feel free to reach out if you need any advice and you can find lenders by using the "Find a Lender" tab up top on BiggerPockets.

Hi @Bree Long

      Cheap money certainly inflated everything rapidly, but we still have a massive scarcity of supply, which will prop up the current prices. The Southeast saw huge migration numbers too, which drove the lack of inventory even more. No one person has the crystal ball to tell you if a reset is coming, but I see no way a reset like 2008 could occur when supply is lacking badly. And what will happen when rates do come back down is more rapid appreciation in values again because there will be a larger amount of qualified buyers out there with the lower rates. We lend in TN and NC and are fairly active in those markets, so I think we are seeing a little cool off, but I'm not convinced a large reset is coming, but again, no one knows for certain. 

Hi @Jason Sung

What type of loan product would you be using? Rates are temporary and you can always refinance in a few years when rates come back down. If the loan program (like a DSCR loan) has a prepayment penalty, just make sure it is for no longer than 3 years. Alternatively, if you have a decent DTI ratio, you could go with a bank statement loan with no prepayment penalty.

What type of loan is it? On a DSCR loan, this would violate the non-owner occupancy guideline with a lot of lenders. Your immediate family is seen as an extension of the owner, hence this is not allowed.