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Updated almost 2 years ago,
Hard money loan understanding
Hey guys
I would like to understand something
Purchase price: $270K
Reno: 70K
ARV: 420K
My lender fund 75% from ARV which is 315K , it covers the purchase price
also he covers 100% or rehab , I need explanation about the rehab , why should they cover for me 100% of rehab , what are they gaining from that ?
eventually I spend money from my pocket on the remodeling and everything is coming back for me , what is the catch here ? They really financing 100% of remodel , if this is the case , even if the remodel will be 100K so why to save on remodel costs ? I understand the draw process and I have the money in the bank , so as long I can finance it by myself before the draws I’m good ?
Please help me understand it
thank you