Lenders

[Joan Behring]

Has anyone used a "hard money lender"? If you have could you tell me what the pros and cons are. Thank you.

Joan Behring

[Jon Holdman]

Used one.  Been one.

Pros:

They will fund properties conventional lender's won't.

Some will have lower down payment requirements than other lenders.

Some will fund all or part of the rehab costs.

Typically can close much quicker than other lenders.

Cons:

Expensive.  Assume 3-6 points and 12-18% interest.  Plus some other fees.

Short term.  6-12 months.  You need an exit plan.

Most won't lender for owner occupied properties.

If you default, they're taking the property.   Don't expect any working something out or modification or anything of that sort.

Rehab money is usually given to you only once work is done, not up front.  So you have to fund work, get it inspected then get the rehab money in "draws" as the work passes inspection.