All Forum Posts by: George Despotopoulos

Hi Kevin, we would need some more info on the specifics here before we could issue you a more tailored response on the matter.

At what rate have you obtained current financing? Also, what term is it, 12 month with option to extend? And how many months have you had this hard money loan. 

Hard money is typically 10% - 14%. Private money should be 7.5% - 9.5%. 

Your FICO for private money (for rental properties) usually will need to be 600 and up. If it's under 600, there should be explanations for it. If it's due to a foreclosure or bankruptcy that may disallow you from financing if it's fairly recent (less than 2 years).

Hi @Aaron Hays welcome to the forum! I can give you some advice from the non-bank lender space (also known as private lending). 

Some lenders have seasoning requirements. This means you have to wait a certain time before they will cash you out. Other lenders have seasoning requirements where they will lend to you, for example before a year of ownership, but they will cap the maximum cash you can pull out to your all in cost (purchase price + documented renovations). This all depends on the lender and varies. 

Usually if you've owned the property for more than a year, you would be eligible to do a cash-out refinance and go above 100% LTC (loan to cost, or your all in cost, as stated above). Cash-out refinances have higher rates and stricter caps on the amount you can pull out. In the non-traditional lender space rates will be 7.00% - 8.75%. And most lenders will cap you at 70% LTV (loan to value). This means they'll cash you out only up to 70% of the appraised value. Your rate will be determined by the property's value, the amount you're pulling out, your experience in rental property ownership, the number of rental properties you have owned, your FICO, and the rental property's income (not your personal income)>

Hi Dave, what do you usually put down and what kind of properties do you plan on investing in (SFR, 2-4 units, 5+).

Also, what sort of rates have you been seeing.

Most private lending companies go up to 70% LTV on loan amounts under $100K and some have a minimum loan amount of $75K, while others have a minimum loan amount of $50K @ 70% LTV, which would mean your purchase price would have to be at least $71.5K.

If you're purchasing properties at that price point it may be worth looking into a bridge loan, especially if you need a little financing on some rehabs. You can improve the value of the prop and refinance into a longer term/lower rate.

Hi Alfredo, same question as Bradley, are you saying you're looking to get out of your hard money loan through a refi?

A few questions. I'm assuming since this is a business model you're referring to, your hard money is non non-owner occupied investment property. Do you still qualify for conventional financing and have you spoken to any traditional lenders. 

A private or non-bank lender would be able to refi you out of the hard money for a longer term and lower rate. Usually terms start at 10 years and can go to 30yr. Rates in private / non-bank lender space are 7% - 9.5% or so, whereas commercial lenders may be able to give you something in the range of 5.5%.

There are definitely options in Iowa! I would start the search with the Marketplace. 

Yes of course @Shadera Williams, feel free. 

Hey Shadera! Are you investing through an LLC or individually? I think it may be easier to procure financing in VA as an LLC (or other entity for that matter).

Also how much of the purchase price are you looking to finance and what is the loan amount?

Hey Michael, lenders in VA are a little more scare than other states as VA may require licensure in certain circumstances, even for hard money.

But those who do lend can definitely be found through BiggerPockets. There's a marketplace section (at the top of the site) where you can connect with lenders. I would suggest posting there! 

Keep in mind, hard money is typically 12 month terms, interest only w/ a balloon payment @ maturity. The rates generally range from 10% - 13% based on your characteristics, the loan amount, the property's purchase, etc. Most lenders go up to 80% of LTC or 70% of ARV.

Charles, for conventional it seems to be around the norm atm.