Hard money lender question

[Victor Paez]

Hey gang

Newbie question. I’ve read all these stories of everybody who started where they’ve had to go through obstacles personally, bad credit, 0 money, etc.

I know you can get creative but first have to go through your first line of support which is family or friends, then hard money lenders.

My question is, if a hard money lender agrees to fund your day with an agreed upon conditions, so do these lenders typically ask for a monthly payment or do they just require the loan amount plus their fees at the said end date which from what I gather is 12mos? I ask because, I’m having a hard time understanding how to structure payment vs asking rental amount vs market

Second question, scenarios with newbies with troubled credit who happened to acquire a property through a hard money lender, how does their credit impact their refinance chances when the property stabilizes after a year of ownership? Refinancing so you can pay off hard money loan

Thank you all for your time and stay Blessed

[Kerry Baird]

@Victor Paez, I have purchase a property with hard money, and then used my credit cards to renovate, and then when it comes time to refinance, my debt to income ratio was tight. My husband's credit was better than mine, and he has W-2 income. We both have VA entitlement, and his was available, so we used the VA. They still wanted a lower debt to income ratio, VA or no. Should my husband's credit have been any tighter, we could not have refinanced.

So, you can do a few things.  First is WAIT.  You can take another job, and really throw stuff at the credit cards.  Save up for a  nice down payment. 

Second, you could look at seller financing deals, to include lease options.  I've found a number of older folks who are happy to earn 6%, and have a paid off house.  I gave them a down payment and then make monthly payments to the seller. 

You could sell what you have and reposition.  Take a little profit and do a small reno, take a little profit to pay off credit cards and do another small reno.  I say "small" so that you don't get over your head, and because the finish doesn't have to be so expensive on smaller, older houses.  Get some money together and do a longer term hold, with hopefully cleaned up credit.

My Realtor sends me a list of sellers who say they are creative, straight from the MLS. I have carried back second mortgages for sellers, and so I always ask for owner financing. I am also always looking for owner financing.