Hard Money Lenders for First Time Flip - Tampa, FL

[Ryan Johnston]

Hey BP,

Just moved to the Tampa area and I'm finally going to begin flipping houses here. I've been waiting to move into this market for about 8 months and I'm super excited to be here. I was wondering if anyone had any advice for someone looking for a hard money lender or a bank that'll fund my first flip with me. I'll be able to put a sizable chunk of change down but I won't be able to fund the entire thing. 

I'll need a loan somewhere in the $75k-$150k range. The fix-n-flip should take me about 2 months to complete and the ARV's are going to be around $220k. I have a ton of construction experience and contractor management experience for multi-million dollar projects if that counts for anything (My W2 job is a project manager for a huge general contractor).

Does anyone have a piece of advice for me regarding funding my first flip? I prefer to work with local lenders in the Tampa Bay area (St. Pete, Clearwater, Largo, Brandon, etc). It's the only part I'm stuck on. Thanks everyone!

[Costin I.]

@Ryan Johnston There could be major differences between various lenders - here is a list of questions to help you bring them to an apple-to-apple comparison:

Questions to ask when shopping around for a hard money loan

• What % of the ARV is leant out
• What is the interest rate?
• When are interest payments due?
• First time investor/borrower rate
• Points
• When are the points & fees paid? (e.g. at closing or when you refinance/sell the house?)
• Term
• Is there a minimum loan term?
• If so, what is the pre-payment penalty?
• Is there a maximum loan term?
• If so, what happens if more time is needed?
• Is there a minimum loan amount?
• Repair escrow
• Does interest accrue on money held in the repair escrow?
• Admin Fee
• Underwriting Fee
• Legal Fee
• Extension Fee
• Processing Fee
• Required 3rd party fees (e.g. certified appraisal)
• Inspection/Draw Fee
• What is your draw process and how quickly will I receive funds?
• DP Or Reserves required
• Personal docs
• Property Required docs
• LLC required
• Insurance required
• How fast can the deal close?
• Approved amount
• Prequal letter provided
• Does one have to use a specific conventional lender, or can anyone be used (for buy-and-hold properties)?
• What properties do you NOT lend on?
• What stipulations does your loan program have that other hard money lenders do not? (e.g. Contractor gets the materials funds up front, but the final draw payment is not refunded until you refinance; must have only 1 contractor bid and do a mechanics lien at closing [if you have more than one contractor it won't work]; MLS deals work, but you cannot have an assignment of contract; etc)
• What other value-added services do you provide that other hard money lenders do not?
• Contact
• Notes

Here is an example of compare between 2 lenders:

	Lender 1	Lender 2
What % of the ARV is leant out	The lesser of Up to 70% of ARV OR 90% of Cost (purchase price + renovation budget)	Up to 75% of ARV for rentals, 70% for flips
What is the interest rate?	12% rate	14%
When are interest payments due?	?? ACH required	end of the month (except the month of close, you prepay with the prorated number of days)
First time investor/borrower rate	12%	same
Points	3% (I can do 2 after a few deals)	3% (1% / 2%)
When are the points & fees paid? (e.g. at closing or when you refinance/sell the house?)	All points paid at the start	We split our fee 1% up front and 2% upon payoff.
Term	Up to 6 months	Up to 18 months
Is there a minimum loan term?	3 months	no
If so, what is the pre-payment penalty?	Yield maintenance applies	n/a
Is there a maximum loan term? If so, what happens if more time is needed?	6 months, 3 month extension (optional) You can extend.  Cost 1 point of original loan amount.	18 months; not sure – I haven’t had it happen, but I imagine a point or two
Is there a minimum loan amount?	50k or thereabouts	50K
Repair escrow	Yes, if rehab is included we can hold back for that	A mandatory component of the loan (unless you want to borrow 70% minus repairs).
Does interest accrue on money held in the repair escrow?	Interest accrues on loan balance.  So if you finance a portion for the rehab, then interest will accrue on that amount.	NO
Admin Fee		$ 0
Underwriting Fee		$ 0
Legal Fee		$ 0
Extension Fee	1%	$ 0
Processing Fee	$950	$ 625
Required 3rd party fees (e.g. certified appraisal)	$30 credit report $15 flood certification $400 appraiser's fee $400 doc prep	Approximately $450 for a full appraisal from our pool of third party certified appraisers. We may require a survey if there is not one already – these normally cost between $350 – $450 for a single family house in a suburb. Flood certificate of around $20.
Inspection/Draw Fee	$100 each	$ 150
What is your draw process and how quickly will I receive funds?	2-3 days.  Submit on my website and we ACH deposit into your account Inspection required to verify work completed	Day 1: request Day 2: inspect Day 3: wire funds to investor (business days)
DP Or Reserves required	Minimum of 6 months liquid reserves - Checking/Savings-MMA/CD/etc.	We don’t require any down payment (unless it’s your first deal and you have a deal where the rehab + purchase price + closing costs are under 70%, we may lower how much we loan you so that you have skin in the game).
Personal docs	620 min credit score No recent foreclosure and/or bankruptcy	Getting started with us is fast and easy. Click here to go to our online application – ... We do not require copies of any paperwork (e.g. paystubs, bank statements, etc), but you may need to refer to these documents to enter your financial information. It usually takes 5 – 15 minutes to complete and gives us a big picture snapshot of your personal information and goals.
Property Required docs	First lien only Appraisal and inspections must be ordered by WL	1) The contract, 2) Your scope of work – this will be used 1) by our certified appraiser to help determine the ARV and 2) it will be referred to whenever you submit a draw from your repair escrow. 3) An insurance policy on the property where Investmark Mortgage named as the beneficiary (let us know if you need any insurance broker referrals) scope of work (SOW) examples – Bids from your contractor might be adequate to serve as your SOW as well.
LLC required	If closing in a business entity a business search may apply ...at what cost??	If you are buying this in an LLC we will need your Articles of Incorporation and Operating Agreement. There is the one time fee of $350 to get these reviewed by our lawyer and we can add the cost to the HUD 1. Any future loans will not have this charge.
Insurance required	Borrower must provide a minimum 6-month insurance policy to be paid in full on or before closing The amount of insurance coverage may not be less than the loan amount and must include vacancy, vandalism and malicious mischief	The insurance policy on the property needs to name Investmark Mortgage as the beneficiary. The insurance coverage will need to be at least the loan amount against the property (70% of the ARV for flips & 70% or 75% for rentals). The effective date of the policy will be your close date. (see referrals*)
How fast can the deal close?	Avg is 1 week	From the moment I give you the contract and scope of work, expect 2 weeks to get the appraisal done by your appraiser. Appraisers are very busy these days, so I would put the closing date at two weeks from the contract date to be safe.
Approved amount
Prequal letter		Yes, provided
Does one have to use a specific conventional lender, or can anyone be used (for buy-and-hold properties)?	Anyone	Anyone
What properties do you NOT lend on?	Residential (1-4) family investment properties only	land (but we do new construction), commercial (except apartments), mobile homes
What stipulations does your loan program have that other hard money lenders do not? (e.g. Contractor gets the materials funds up front, but the final draw payment is not refunded until you refinance; must have only 1 contractor bid and do a mechanics lien at closing [if you have more than one contractor it won’t work]; MLS deals work, but you cannot have an assignment of contract; etc)	Owner and Mortgagee Title Policies required	none!
What other value-added services do you provide that other hard money lenders do not?		Lender  does not charge interest on the repair holdback until borrowed >> We do NOT accrue interest on money held in the repair escrow. This is a sizable savings if there is a lot of rehab required. >> Two of the three points are pushed to the backside of the loan. >> For buy-and-hold properties, we can loan up to 75% of the ARV instead of 70%. This means less cash to close which is great if you need the upfront cash to start the rehab or to show reserves for the refinance. Also, if the refi appraisal comes in a little higher, there is the potential of there being significantly less overall cash out of pocket for the entire deal. >> Low fixed fees of $625.  There are no junk fees.  There is no nickel and diming on the HUD-1 closing statement. >> There is no minimum loan term.  >> Our maximum loan term is 18 months.  Most other lenders are 6 or 12 months. >> We offer a free property valuation by one of our certified appraisers. >> Need to know how the numbers work on paper?  We have free deal analysis reports. >> Top notch contractor or vendor referrals to help build your team.
Contact
Notes	Loans are based on ARV of the property and include both purchase and renovation funds