Rookie Hard Money Question....

[Felipe Munoz]

Insanely rookie question: Can someone go through step-by-step process of using hard money loan to purchase a fix and flip property? Can you start from very beginning of process ("that house looks like a great opportunity for my first fix & flip! I need to move quickly and don't have a money partner. I think hard money is my only option......"). If it's asset based, how do you line up financing before you have a potential deal or do you find deal first? Can you use hard money loan to purchase, fix & flip a short sale? Is that an entirely separate topic? Thanks for any advise.

[Kerry Boyle]

If you want to be cheap:

1. Find a list of direct lenders (also get a few local contractors). BiggerPockets.com; personal referrals; local and national lenders.

2. Call them and figure out what they require. Downpayment, tax returns, DTI, LTV/ARV/Rehab percentages, bank statements, LLC or sole proprietor.

3. Get estimate of rates.

4. Pick the one that is best suited to your needs. Speed, cost, requirements, vibe.

5. Complete application and get a pre-approval.

6. Find properties. We buy houses campaigns, marketing, MLS, referrals.

7. Send contracts out en-masse with low EMD and enough contingencies to get you out for any reason. 70% Rule of thumb, $10 EMDs, financing/inspection contingencies.

8. When you go under contract (Congrats!), review and submit required information to your lender. Appraisal and title work start, get rehab bid from a contractor.

9. Close and start repairs... rest is another topic.

Short sales are perfect for Hard Money. Make sure you have some money in the bank or at least access to money. Few HMLs work with no experience and no money, and those that do will be getting a pretty penny.