When should i look for hard money loans

Question

Hello BiggerPockets

Forgive me if this has been asked before but i was wondering when should i get a hard money loan? Is that something i should have a deal already setup or can i shop for different lenders first?

Michael Edwards · Answer

Thanks for the reply's and help. I am working on a plan now and i am looking for some simple plan templates that may help me out as this is all new to me. I want my main focus to be on house flip for now but late on move to rental and or both. I'm also leaning toward buying homes at sheriff auction as i have them every other week in my town and i could potentially get some for under 10,000. I am looking at one up for auction next week that could have a good resale as long as bidding doesn't go to high. Not 100% sure if that's the route i'm taking yet tho or just find a deal to fix and flip because the wait time after the auction can take 30 days or more to clear and put in my name. Plus the owners have a chance to pay the property taxes and keep there house even after the auction up to that 30 day mark. I have a little bit of time left to decide which route i want to take at first.

Ben Stoodley · Answer

@Michael Edwards I agree with reaching out before. Most lenders will want to talk to you and build a relationship. So come prepared with questions for them in case they’re busy and make sure to have a clear investment strategy. Experience is always important so if you’re new, I would suggest showing them how well planned out your project plans are with well organized details (teams in place, price ranges targeted , planned Capital investment from your end,   back up exit strategies, etc). Later when they’re Underwriting your deal, the more professional presentation the better.

Frank Hinck · Answer

@Michael Edwards

Reach out to a few first before you find a deal and then need them.  They’re lending to you, so you’re shopping & interviewing them.    They’ll want to see your experience, basically a BP Deal Diary worth of info and know their funds are in good hands.    When it goes come to funding a deal, they’ll want you to analyze and present to them: purchase price, construction SOW & cost, comps and ARV.

Marlen Weber · Answer

Great question, @Michael Edwards. I found this link to be pretty helpful when it comes to hard money lending. Hope it helps.