insurance requirements for hard money

[Ryan Fox]

I’ve been doing private lending for a while for fix and flips.  I’m not sure the insurance requirements that I’m requesting from borrowers are appropriate.  These are the rough numbers of a deal I’m currently underwriting:

Purchase $78k

Rehab $40k

ARV $180k

What do hard money lenders require in terms of types of coverage and amounts for this type of deal?

[Derek Dombeck]

I co owned Best REI Funding for 10 years and our policy was they had to have replacement cost value insurance at 125% of the loan amount. We would never fund without the policy binder in place prior to closing. The policy had to be a builders risk policy for vacant buildings.