Is hard money hard to get?

[Felix Caba]

I'm just in the process of getting all the information I can to start my real state journey, and I wanted to know for a new investor how difficult is to get a hard money loan for a flip or BRRRR? Should I try to put more than 30% down?

[Stephanie P.]

Originally posted by @Felix Caba:

I'm just in the process of getting all the information I can to start my real state journey, and I wanted to know for a new investor how difficult is to get a hard money loan for a flip or BRRRR? Should I try to put more than 30% down?

Hey Felix

One key to using hard money is to buy the property at the right price. We use 70% of the after repair value (ARV) as a guide. Here's an example; You buy a property for 100K. It was an estate sale or something that caused the owner to decide to sell it rather than fix it up. Nothing major wrong with it. Similar houses are selling around 200K, but they've been updated, cleaned, painted and maybe have new bathroom fixtures, new kitchen cabinets and appliances, a new roof and brand new HVAC. You put 40K into the renovation and list the property. It sells for 200K. You're all in at 140K or 70% of the ARV.

You should be able to get that type loan at 80% loan to value for the acquisition and have 100% of the renovation covered in draws.  Rates are anywhere from 7.5% to 9% with 3 or 4 points.

Most hard money lenders don't want to lend as a first home, so hopefully you already own your primary residence

Best of luck

Stephanie