Any advice on Hard Money?

[Chris Virgil-Stone]

Hi Everyone,

I’m looking to do my first flip with a hard money lender. I have the capital and sound real estate knowledge. Being a landlord for 3 years and doing all the work myself, reading book after book and listening to podcasts I have learned a lot. I was wondering for anyone who has used hard money before if there were any surprises in the lending process? Not the actual renovation or flip, strictly in the lending process such as surprise fees or terms that you did not know about. I appreciate any and all feedback and am excited to take the next step.

I do have good exit strategies and am willing to take the risk as it has been something I have wanted to do for some time but was unable to. 

-Chris

[Cody Campbell]

Quick breakdown.

Hard money loan of 100k

-usually 3-5 points up front (3-5% cash you give the lender for the loan)

-usually 6-12 month term @12% apt

-you pay interest only each month (100k @ 12% is 12k) (12k/12months...you pay the lender 1000/month until you return his initial loan of 100k

So your 100k loan over 6 months will cost you 3-5k upfront and 6k in interest payments.

If you can flip the house in 3 months you only owe 3k in interest for the loan