The term for the loan is 12 months and I am required to use a LLC on the property and I wondering what would you do with deal and how would you get out of the hard money loan without having to sell the property?
Rental Property Investor · Springfield, MO · Member since 2019 · 462 posts · 365 votes
6y
I have never dealt with a hard money lending company. All of my HML has been through individuals who have extra cash to invest.
I would say check out the details and read aaaaallllll the fine print. LendingOne advertises "rates as low as 7.49%" but their lending rate is 75K-4mil so I bet that 7.49% is if you want to borrow 4mil and if you want the 75k it will be something like 27%.
Also, in your example you are showing that you are doing 15% down ($8,700 down). So... do you only have 15% down or have nothing down?
Also... a 15% down hard money loan when the Purchase Price is 68% of ARV sounds like a bad deal... unless it needs over $10K in repairs. Those terms sounds like just a traditional/commercial mortgage from a bank.
Most hard money loans are 100% purchase and sometimes 100% purchase + reno costs.
Real Estate Investor · Burlington, VT · Member since 2010 · 2k+ posts · 1k+ votes
6y
@Brian K Morton If the property is fully renovated, why use HML at all and not just a conventional loan? HML is typically for rehab where you force the appreciation, which covers the high costs of the loan.
Rental Property Investor · Springfield, MO · Member since 2019 · 462 posts · 365 votes
6y
+1 for what @Tom S. mentioned... You should not be using hard money to buy a fully renovated property. Just find a commercial lender that will need 15-20% down.
Rental Property Investor · Overland Park, KS · Member since 2019 · 5 posts · 1 vote
6y
I wanted to use a HML because I don't have the funds to put 20% down, I would use a FHA loan but I am currently renting somewhere. Have you guys heard of HML companies that lend on rental properties like "Lending One" and "Visio Lenders" ? if so what are your views on those types of lenders ?
Rental Property Investor · Springfield, MO · Member since 2019 · 462 posts · 365 votes
6y
I have never dealt with a hard money lending company. All of my HML has been through individuals who have extra cash to invest.
I would say check out the details and read aaaaallllll the fine print. LendingOne advertises "rates as low as 7.49%" but their lending rate is 75K-4mil so I bet that 7.49% is if you want to borrow 4mil and if you want the 75k it will be something like 27%.
Also, in your example you are showing that you are doing 15% down ($8,700 down). So... do you only have 15% down or have nothing down?
Real Estate Investor · Burlington, VT · Member since 2010 · 2k+ posts · 1k+ votes
6y
@Brian K Morton Most HML's will still require 20% down, especially if it's your first deal. As the property is fully renovated already, definitely pass on HML as the fees and interest will kill you.
As Jon just posted above, if you have 15% down already, I would seek the other 5-10% and just get a standard investment property loan, as that will have the lowest fixed rate and term.
Lender · Boca Raton, FL · Member since 2017 · 30 posts · 13 votes
6y
Hi, @Brian K Morton. I'm the Inside Sales Director at LendingOne. You have been given some solid advice in this thread. Most lenders, even in the private space, will require 20% down for rental properties. To clarify, our rates are based on borrowers' credit and the LTV. Loan size does not impact your pricing at LendingOne. Feel free to connect with me and we can discuss in further detail. Thanks!