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Hard Money and Collateral
Is it feasible to obtain a loan or a good old boy agreement where a lender offers 100% financing for both the purchase price and construction costs at hard money rates, secured by a second position on the borrower's other properties? For example (using general numbers), a borrower might receive $300,000 for purchasing a property and $100,000 for construction and first on the property under construction and secured by a second on other properties they own. The borrower would then refinance within 6-12 months, repaying $440,000 (including a 10% return), allowing the lender to earn $40,000.
@Aaron Sweat
Possibly depending on LTV on those other assets - we have done this in the past.
10% interest is probably low I would expect 12-15% plus points but shop around.
@Chris Seveney thank you for the quick reply. Sounds like we should connect to discuss details. Do lend in CA?
Quote from @Aaron Sweat:It is feasible to get 100% finance at 8% with no points or fees through private investors. I've done this many times.
Is it feasible to obtain a loan or a good old boy agreement where a lender offers 100% financing for both the purchase price and construction costs at hard money rates, secured by a second position on the borrower's other properties? For example (using general numbers), a borrower might receive $300,000 for purchasing a property and $100,000 for construction and first on the property under construction and secured by a second on other properties they own. The borrower would then refinance within 6-12 months, repaying $440,000 (including a 10% return), allowing the lender to earn $40,000.
Quote from @Account Closed:
Quote from @Aaron Sweat:It is feasible to get 100% finance at 8% with no points or fees through private investors. I've done this many times.
Is it feasible to obtain a loan or a good old boy agreement where a lender offers 100% financing for both the purchase price and construction costs at hard money rates, secured by a second position on the borrower's other properties? For example (using general numbers), a borrower might receive $300,000 for purchasing a property and $100,000 for construction and first on the property under construction and secured by a second on other properties they own. The borrower would then refinance within 6-12 months, repaying $440,000 (including a 10% return), allowing the lender to earn $40,000.
Do you have any contacts or recommendations where I can find these folks? 8% and no fees sound great!
Quote from @Aaron Sweat:You can get money on these terms from anyone. Friends, family, work contacts. Again, not talking hypothetically, I've done this for years. The key insight is to copy how a bank operates. Provide liquidity. You keep a fractional reserve, plus credit reserves, plus liquid assets, and the rest of the capital goes into the real estate deals that really drive the return for you. I have a one page contact I used with clients when I was getting started. Happy to share for free. It's much easier than you might think. Happy to elaborate.
Quote from @Account Closed:
Quote from @Aaron Sweat:It is feasible to get 100% finance at 8% with no points or fees through private investors. I've done this many times.
Is it feasible to obtain a loan or a good old boy agreement where a lender offers 100% financing for both the purchase price and construction costs at hard money rates, secured by a second position on the borrower's other properties? For example (using general numbers), a borrower might receive $300,000 for purchasing a property and $100,000 for construction and first on the property under construction and secured by a second on other properties they own. The borrower would then refinance within 6-12 months, repaying $440,000 (including a 10% return), allowing the lender to earn $40,000.
Do you have any contacts or recommendations where I can find these folks? 8% and no fees sound great!