Hard Money lending on BRRRR

[Steven Correale]

Hi,

Im looking to BRRRR in the Boston or Southern NH area. I have a mix of cash and a HELOC available to use, but it seems it's not quite enough to buy most properties in cash in my area (currently working on finding more off market deals to see if that helps).

Would a hard money lender work in this situation if I needed to raise capital? How is payment structured through the lender, monthly interest, lump sum fee, equity? Does anyone have any advice or experience in this?

Thanks,

Steve

[Dave Spooner]

@Steven Correale The inimitable @Brandon Turner wrote a book that covers this in depth. It's a quick, straightforward read and I would strongly recommend you pick it up to get familiar before moving too far down this road: Investing in Real Estate with No (and Low) Money Down.

In any case, there are a few things to keep in mind with hard money lenders. The first and probably most important is the increased risk. These are expensive loans and the only reason to take them is if you're highly confident you can refinance and cash out all you owe after construction.

Payment structure, interest rate, and lump sum payment are all almost certainly going to be included and all are negotiable. You'll likely see rates around 7% to 15% and you will probably pay a lump sum in the form of points. The shorter the loan, the better for you. Expect between 6 months to 1.5 years.