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Is Do Hard Money legit?
This would be my absolute first flip and I've already identified a property that is selling for $50k, and the literal next door over was just bought for $65k and sold for $125k 3 months later.
My Question is: I'm preapproved with Do Hard Money who is offering to give me for my first flip 70% of the ARV. They're offering 5.5 Points on the project and 1.25% interest per month on the money. I have to only put down a $3,000 Down Payment which, after the entire project is done they'll refund me $2,350. Otherwise, the only other money I'll have to put down is earnest money.
They say that they'll fund 100% of the Purchase and Rehab costs if it's under 70% of ARV. Is this a good deal? Is this normal?
From what I know, they are legit, however, they have extremely high standards in terms of what they require for 100% financing. Make sure when you do the calculation you pay attention to the cost to close section because I had a deal where everything looked good yet the cost to close for me was 30,000. For anything for 250,000 (Which is what they max you out at), that is way too high. As for their service though to answer your question in short, yes they are legit.
What was the cost of the property? How did the closing costs get so high? Did they pay for all of the closing?
Do you by chance have a break down of the closing costs?
If you complete the project your financing cost would be 15% and 5.5 points with a $650 fee ($3,000 down with a refund of $2,350 means you are putting $2,350 down on the property with a $650 lender fee).
Sounds like you pay closing costs and your down payment at closing, are you paying the I/O payments monthly or is it due after the sale?
Overall, I find DHM to be a lender that specializes in providing a low cash option for potential investors. They do it at increased costs, so if you have the money to use a "normal" HML that requires skin in the game in the form of a down payment, you will find better profits - but perhaps at the cost of cash-on-cash return. Normal HML is somewhere from 75-85% of purchase price and 100% of rehab at 12% and 3 points. Loans typically are above $75k as well (purchase lending + rehab lending). DHM is a legitimate lender that isn't going to take your money and not answer the phone (at least from my experiences talking with their LO's and borrowers). I don't have any affiliation with them.
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@Kerry Boyle Thanks for the insight! I just spoke with them this morning. But it all sounds too good to be true, so it made me a bit leery.
Is there anyone that's successfully funded a flip through this lender?
And thanks @Alec Rosario for opening up this thread. I was just about to do the same. Please keep this thread updated if you decide to move forward.
My biggest concern is that they make me give the $3k deposit, and then siphon it all off through multiple $650 charges, without ever actually funding a deal.
@Kerry Boyle If I’m understanding this correctly, I don’t make any monthly payments at all, including for interest only. Everything is paid off when profits are posted to the account.
15% is steep! The way their phrasing things made me uncomfortable. They kept complimenting me and they didn’t even really ask about my deal. Yet they wanted payment upfront right there at the end of the conversation. I’m sure they have a proven method. But
@Brandon Jackson No I did not use them. Found private money instead which only would cost me 7% as opposed to the high interest rate. But the deal fell through anyway. Still looking for the next one.
They are legit. I am on my second fix and flip with them now.
Originally posted by @Alec Rosario:
@Kerry Boyle If I’m understanding this correctly, I don’t make any monthly payments at all, including for interest only. Everything is paid off when profits are posted to the account.
15% is steep! The way their phrasing things made me uncomfortable. They kept complimenting me and they didn’t even really ask about my deal. Yet they wanted payment upfront right there at the end of the conversation. I’m sure they have a proven method. But
You make your first payment on month 5. but until then no they want you to focus on the project. I get my properties done and sold within that time frame so I don't have to pay anything but it comes out of the back end of the loan which they show you up front on the Deal Analysis.
Thanks for the update guys.
Paula, as far as the $250K goes...is that the total amount, including 70% ARV, Repair Costs, and Closing Costs? Or do they give the $250K just for the purchase and then tack on additional funding for Repairs, Closing, etc?
no luck with do hard money, they want to much of the pie. You will go hungry and homeless messing with that company
@Brandon Jackson , did you decide to work with HML? I'm looking at them for a project now?
I really wish I would have read this post a long time ago. I did go with the Do Hard Money program and yes they did make you pay 3000 upfront, and you are supposed to get 2350 of that back after you have completed your first deal. They do take a large portion of your profit, so if you are looking at a deal where you sell your property for 250K, and your all-in budget was 200K. You would be looking at 50K to play around with. Well after listing fees, attorney fees, interest on the loan, etc, You probably realistically bring home 20-25K.
Now in regards of the 250K budget. You are really looking at 200K purchase price and a 50K renovation allowance. Here's the kicker, regardless of how much you pay for the property that 50K allowance doesn't change. You can pay 20K for a property but you better make sure it doesn't take more then 50K to fix it.
I still have not found that perfect property to fit within the strict guidelines of Do Hard Money, but If you are getting 100% financing, I guess I should have expected having a harder time.
Hey Toni Husband, I am in the chicago area as well.
Originally posted by @Tony Robinson:
@Kerry Boyle Thanks for the insight! I just spoke with them this morning. But it all sounds too good to be true, so it made me a bit leery.
Is there anyone that's successfully funded a flip through this lender?
And thanks @Alec Rosario for opening up this thread. I was just about to do the same. Please keep this thread updated if you decide to move forward.
My biggest concern is that they make me give the $3k deposit, and then siphon it all off through multiple $650 charges, without ever actually funding a deal.
Did you end up working with them?
If yes, did they return you the 3K deposit that is supposed to be refundable?
Originally posted by @Paula Wallace:
Originally posted by @Alec Rosario:
@Kerry Boyle If I’m understanding this correctly, I don’t make any monthly payments at all, including for interest only. Everything is paid off when profits are posted to the account.
15% is steep! The way their phrasing things made me uncomfortable. They kept complimenting me and they didn’t even really ask about my deal. Yet they wanted payment upfront right there at the end of the conversation. I’m sure they have a proven method. But
You make your first payment on month 5. but until then no they want you to focus on the project. I get my properties done and sold within that time frame so I don't have to pay anything but it comes out of the back end of the loan which they show you up front on the Deal Analysis.
So how much money do you end up paying them? Lets say on a 100K house and 250K house?
Originally posted by @Earl Batiste:
no luck with do hard money, they want to much of the pie. You will go hungry and homeless messing with that company
What did they say?
Originally posted by @Toni Husbands:
@Brandon Jackson , did you decide to work with HML? I'm looking at them for a project now?
What is HML? Hard money lender? Which one?
Alec, where did you find 7% lending rates?
I just spoke with them and they said it's 1.25% per month without prepay penalty and 5.5% on the back end but that's with good credit. I can get a property sold in about a month after rehab so let's say I'm in it for 2 months which is a total of 8%. The charge to start working with them is $3,495. They don't have a minimum loan amount so it's up to $250K so you can do a deal for $10,000 and they'll lend up to 70% of the ARV. I haven't pulled the trigger but in any hard money situation I would just say make sure you have buyers lined up to flip to prior to doing a project. It makes creating profit much easier. Also as you build a relationship with any lender terms can change as long as they're making money
Does Do Hard Money have any refinance options into a conventional mortgage once rehab is done?
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Originally posted by @Nicholas Middleton:
Does Do Hard Money have any refinance options into a conventional mortgage once rehab is done?
No
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Originally posted by @Alec Rosario:
This would be my absolute first flip and I've already identified a property that is selling for $50k, and the literal next door over was just bought for $65k and sold for $125k 3 months later.
My Question is: I'm preapproved with Do Hard Money who is offering to give me for my first flip 70% of the ARV. They're offering 5.5 Points on the project and 1.25% interest per month on the money. I have to only put down a $3,000 Down Payment which, after the entire project is done they'll refund me $2,350. Otherwise, the only other money I'll have to put down is earnest money.
They say that they'll fund 100% of the Purchase and Rehab costs if it's under 70% of ARV. Is this a good deal? Is this normal?
If you have to pay money upfront to a hard money lender (HML), run; for a couple of reasons.
- They're taking too much of the pie
- They don't have enough confidence in the deal to be paid on the property's performance
- They don't have enough confidence in you to make sure you perform.
- You're over your head and that's not the way to get started. Save a little more money and put a little skin in the game; just a little
On a 100% purchase, if you're giving up 3% and paying 1.25% per month (which comes to 15% per year) and 5.5 points, that's pretty steep. They also escrow your payments for, I think, 3 months as well as require reserves (you should have reserves) to make sure you have enough money to complete the renovation. All in all, you must have some cash to make this whole thing work. You'd be better going with less interest and points and putting money toward down payment.
There are numerous HML's out there that will do 80 or 90% of the purchase price and 100% of the rehab and not require 3K up front. Some are better than others, but that's where due diligence comes in.
One girl's two cents.
Stephanie
I had a bad experience with do hard money.they ask me for 5 k up front to fund me a deal,but with so many rules and requirements ,they made it all most impasible to find it. I have not done a deal with them yet, im a little concerned that would not get any of money back.their fees and interest are to high.
That's exactly what I told them. I just talk to them today for the first time and when they ask for 3k and explained the breakdown of it. I said shouldn't it depend on the deal? I don't want to start the interest clock before I find the deal. That's when they went into the tools to help you find the deal and the POF letter that would be required to get a property under contract. They're calling back later today after I get off of work, but I don't think I'll be moving forward with them. Thanks for this thread. MN Bound