Hard Money lending in my area

[Kevin Olson]

I am looking for a qualified hard-money lender in the Orlando, Ocala, Gainesville, and Jacksonville areas. I was told by the listing agent of an Airbnb I am interested in I should consider using a hard money loan for the entire purchase price. And then 12 months later refinance the loan. This is a two-part question. Does anyone know of a reputable hard-money lender in the area and is it a good idea to use a hard money loan for the purchase price of 525,000? The reason is I do not have enough down payment for the 25% down and my credit score is only a 700 so I don't meet the minimum requirements. The property I am considering is an investment and i will not be living in it. Any advice or thoughts on this would be much appreciated. 

[Mike Klarman]

Can you afford to tie up 105k? That's what you need to ask yourself. And since you have 60k I'd say the answer is no. Man, you have 60k to get your RE Investment career going, and I am guessing you are newish because Hard Money seemed new for you and someone told you to borrow 100% from a HML and that just doesn't exist.

You need to build liquidity if you wanna play the game at the 500k as-is value range.  Even fix and flips at that level will cost 50k plus fees if you have experience.

You have a pathway in front of you to get there but you can't start there.

If I was you, I'd look for properties with an as-is 150k value that with a little work are worth 210k or so.  You cut your teeth there.  You hold nothing.  You float 30k-35k for 3 - 6 months and then sell and get your money back plus 25k - 30k profit.  Do that three times.  On deal four you will get 90% of purchase and 100% rehab funds with a low rate and now you'd have 130k in the bank.  Now, if you wanna park the 130k in the down payment in a property worth 600k that produces X amount of dollars per year.

If you have 680 credit and 60k you can start.  Get going on that first flip.  Get the ball rolling in 18 months - two years, you'll be where you want to be.

You really should not park liquidity until you really can afford to do so because these deals are expensive.  Down payments, fees, holding costs, it's not a cheap game and liquidity is one of the biggest deficiencies among new investors.  People call me all the time and tell me they want to buy a property worth 250k lets say and I'll say ok, what's your credit score - 620 they say - then I'll say well how much capital do you have for down payment - and they'll say 15k.  For a 620 credit score the deal would cost 75k plus fees.  You can maybe rehab a Honda for 15k.

One of the barriers to entry is liquidity.  Most have just enough for one deal so the most you should do is tie your liquidity up for a few months at a time in these fix n flips and then in a year or so you are in a different liquidity position and now you have experience too.  Now you can play with the big boys a little and be a respected borrower at a big lender.

Like I always say, anyone who wants to get that ball rolling and has 0 exp - get yourself to a 680 credit (so there are no leverage deductions on you) and come in being to afford that first deal and I'll help anyone get the ball rolling.  I love creating new investors and helping people getting into the game.