Hard money landers questions

[Juna Duri]

Hello, Fist time using hard money landers. How much does it usually cost to get a hard money loan? ( fees, up front cost, etc.) Who decides the ARV (after repair value) of the property I want to purchase? Is it anything that I have to be careful with hard money landers? Any good referrals for hard money landers? thank you!

[Andrew Michael]

Hi @Juna Duri

I would be glad to answer any questions you may have and walk you through the loan process.  

Depending on the lender, there can be several fees associated with a hard money loan but that is not always the case.  Expect to pay for points, appraisal, ins, etc.  Some have additional fees such as wire fees, inspection fees, draw fees, etc.  It is a give and take based on the terms of the loan but every lender will have their own structure.  

In terms of the ARV, usually you can get pretty close by running comps of the subject property. If there is a huge discrepancy then it may effect your total loan amount but for the most part this will be a non issue. As others have said, the lender will likely order an appraisal anyway but in the end your loan amount is based on the lenders comfort level with the deal and what they are willing to lend on the project.

I would watch out for lenders who say they will fund 90-100% of your deal.  If they are willing to take on that much exposure they are likely going to be compensated by junk fees, high rates, or dip into your profits.  I would expect to put down 20% or so.  Right now most lenders are 2-5 Points at 10-12%.  If you are paying more then you are paying to much.