Can someone help me find a good hard money lender

Question

Hello I currently have a property under contract in Marin we plan to convert a duplex back to a single family home.

The home was converted into a duplex back in 2008 we merely want to convert it back to a SFH. we've already contacted the county planning department and they said it wouldn't be a problem.

our current lender says they will not lend for rehab on something like that they even say no other hard money will is this true? the house seriously needs a lot of rehab work and our lender says they don’t lend on rehabs that would require us to pull permits.

This is crazy because if I were to remodel a home I would definitely pull a permit as I would not want to get caught without one. They say no hard money lender will lend on a rehab that requires permits?

Any thoughts

Dan Beaulieu · Answer

@Brian O.

Keep it a duplex and keep your rehab costs down. A renovation that big wouldn’t be a great idea for a first project. A duplex will command a high price also due to the mad rush to house hack. This is all market specific of course, so just run comps on both and compare with your overall cost…but as a seasoned investor I probably wouldn’t even take that on. I always choose the path of least resistance even if it makes slightly less money. Your time Is surely worth something.

Your hard money lender is wrong about no other lender wanting to take that on btw. Just call around!

Michael Dumler · Answer

@Brian O. I agree with Dan, you need to run comparables and assess the gross rent multiplier when deciphering if the property is more valuable as an SFH or duplex respectively. Pulling a permit will not rule out utilizing hard money but recognize that oftentimes dealing with the County can be a lengthy and burdensome process for granting rehab approval. Bottom line, you need to consult with multiple hard money lenders to determine who will be best to work with and more importantly, which lending institution will give you the best rates and terms. Furthermore, and not to sound like a broken record, make sure you have all your ducks in a row. For a bigger project such as this and when working with a hard money lender, you need to ensure that everything is to be completed by a certain date to prevent running into any problem. Hope this helps!

Mackenzie Grate · Answer

In my experience, whenever a lender says "no one else will lend on that either" it usually means there is someone out there who will do it, but you are going to have to do the leg work and call many lenders. Where there is a will, there is a way. No two lenders are alike. Different lenders, especially hard money lenders, have different types of investments and requirements for what they will or won't lend on. So keep looking, they are out there.

That being said, if several lenders turn you down, there is something to consider there. Is there a reason they all are turning you down? Is the project too risky? Usually lenders will only lend on something that they think is considerably less risky. Is your particular project worth it? Is there enough meat on the bones with the numbers when you run it? If several lenders, especially different types of lenders, are uncomfortable lending on it, that may be pause for reconsideration...

Either way, I'm sure you will figure it out. Good luck! Excited to hear how it goes and what you decide! :)

Brian O. · Answer

Hey everyone thank you for the input just some closure on this thread I did shop around and I did find another lender that would fund such a project.

I come to the determination that my previous lender just plain and simple did not want to fund the deal. My whole gripe is just tell me that straight up! Don’t give me this BS that you can’t lend on rehabs that require permits.

Anyone wanting to know which lender this was I am open to sharing but not on this public thread because  know matter what I go through with a company or individual I will never slander them on a public thread like that IDK I guess I’m not that type. Thanks again I will definitely be back with another thread if I need some advice!

Jay Hinrichs · Answer

Try Conventus  in SF  for a real lender.

Brian O. · Answer

I’ve already spoke to the planning department and they say that its not a problem it’s all a matter of paperwork as long as there are no tenants in the building that are on section 8 or any kind of government assistance.

It is kind of an odd situation because the neighborhood is not known to have apartment buildings or duplexes in the area it’s as if someone decided to split their SFH into 2. The neighborhood petitioned against it and the previous owner decided to convert it anyway and  Marin county approved it because of the housing shortage.

According to the neighbors it has brought nothing but trouble and nuisance to the neighborhood with different renters every few years. The property has so many violation complaints that they would be more than happy to turn it back into a SFH.

Darius Ogloza · Answer

@Brian O. Your instinct that SFR's should fetch a premium price over small multi-units in Marin is accurate.  The demand for SFR's during this market moment is unlike any other.  About the only properties that sit for longer than 30 days are multi-units and wildly-overpriced SFR's up in the hills.

I suspect your hard money lender and you have been having a communication problem.  Could it be that the fact that there will be a zoning/planning issue is what is at stake (and not permits)?  The explanation about "no money if you need to pull permits" is really nonsensical.

Bob Reinhard · Answer

@Mackenzie Grate "ditto"

Much success Brian !

Bob

Brian O. · Answer

thank you for that idea I will look into it asap

Can someone help me find a good hard money lender

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