Lessons learned with a hard money lender

[Matt Ridenour]

I have been buying with cash and rehabbing properties.  That is obviously a cash intensive strategy, so I looked into hard money.  I found what I thought would be a good solution.  I used Lending Home.  My rep was very positive and professional and the web interface is clean and easy to use.  

Here's what went wrong. Because I do my own work, my rehab costs basically just include materials. This was a red flag with underwriting, as the budget seemed low. They told me that if I wanted the loan to go through I had to increase my rehab budget. I increased the rehab budget and they came back and told me that the LTV wouldn't work because the rehab budget was too high.

Sigh.  This would have been a good win for them and myself.  Now of course I'm in a cash crunch.  I expected the loan to close this week but instead I'm scrambling for a solution.  

For those looking to use hard money, make sure you do your homework ahead of time and don't count your chickens until they hatch.  Lessons learned.....