New to Real Estate · Jacksonville, NC · Member since 2021 · 13 posts · 3 votes
Can anyone explain to me the concept of using a hard money lender on an investment property? If someone wanted to purchase a condo in a beach town and had X amount of dollars to put down but that amount was not enough to cover the cost of a conventional mortgage down payment. Can you have a hard money lender cover the rest of the down payment? Or do you have to have the hard money lender finance the purchase price minus the amount being put down by the investor? Any advise on this would be a great deal of help. Thank you!
Lender · PA · Member since 2019 · 533 posts · 461 votes
4y
Hi Michell: So you will need he necessary down money to purchase the vacation property regardless of whether you use bank financing or funding company financing. Your skin in the game can not be financed with a bank or funding company. The general rule is no second mortgages.
If you do not have the down money, loan and closing costs you can always find a JV partner. As I have said many times on BP it is easier to find money than a good deal. Good luck!
Lender · PA · Member since 2019 · 533 posts · 461 votes
4y
Hi Michell: So you will need he necessary down money to purchase the vacation property regardless of whether you use bank financing or funding company financing. Your skin in the game can not be financed with a bank or funding company. The general rule is no second mortgages.
If you do not have the down money, loan and closing costs you can always find a JV partner. As I have said many times on BP it is easier to find money than a good deal. Good luck!
A HML will generally cover a percentage of the total project costs, and you will be responsible for providing the rest.
To use a hypothetical example, let's say you are looking to acquire an investment property and do 0 rehab on it.
The HML may provide 80% LTC (loan-to-cost), or in this case 80% of the purchase price. You would be responsible for bringing the remaining 20% of the purchase price.
Most HMLs like to have the "1st and only" lien on the investment property, which would prohibit other lenders from getting involved.
Lender · Member since 2022 · 441 posts · 134 votes
4y
If one does not have enough for a conventional 30 year program down payment and you can show 1 fix and flip or rental hold over the last 2 some hard money lenders will allow you go to 15% down and if you had 4 or more experience you could get 10% down.