Hard Money and Collateral

[Aaron Sweat]

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.

[Chris Seveney]

@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.

[Aaron Sweat]

@Chris Seveney thank you for the quick reply. Sounds like we should connect to discuss details. Do lend in CA?

[Account Closed]

Quote from @Aaron Sweat:

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.

It is feasible to get 100% finance at 8% with no points or fees through private investors. I've done this many times.

[Aaron Sweat]

Quote from @Account Closed:

Quote from @Aaron Sweat:

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.

It is feasible to get 100% finance at 8% with no points or fees through private investors. I've done this many times.

Do you have any contacts or recommendations where I can find these folks? 8% and no fees sound great!

[Account Closed]

Quote from @Aaron Sweat:

Quote from @Account Closed:

Quote from @Aaron Sweat:

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.

It is feasible to get 100% finance at 8% with no points or fees through private investors. I've done this many times.

Do you have any contacts or recommendations where I can find these folks? 8% and no fees sound great!

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.