Refinancing a Hard Money Loan for out of state properties

[Denise S.]

Ok

It is not the route i want to go, but i see its my only route at this time.

I'm going to look into hard money loan financing for the start of my real estate business venture. Since I am planning to purchase multi-family and single home properties in Texas and California.. I wondered.. If I got an hard money loan in Texas to purchase my Buy n Hold.. can I refinance it with a loan from Ca.. or do I have to find refinancing in that state and vice versa?

Any helpful advice will be appreciated~!

Thanks!!!!

[Swat Khan]

Denise,

If you're going hard money on a turn around project, it will require the owner-operators supervision to keep your GC and management true.

1. Get Local: Why not use a TX lender on the property in TX? Yes, depending on who's lending you may need a local sponsor that lives in Texas. I wouldn't be surprised if you find California lenders in TX however they will need to be already comfortable originating loans in TX.

If you are not in contract, get "in" with your lenders prior to presenting them a deal.

2. In general, when you speak to hard money guys you'll find 9/10 times they want to be near the property and they want to make sure that the owner-operator is capable of paying them back and has estimated the repairs properly.

3. Process to get started:

A) Get property under contract.

B) Find a property management company local to the property who has a CCIM. This will be leveraged to make your team strong. If you can, you would want to be at the property to asset manage during the early stages if it's a turn around since you're using HML.

C) Get your inspections done and deferred maintenance bids.

D) Get lender involved. Send a resume of your team, inspections, and stabilization plan from your trades to your hard money/bridge lender

E) They will send 3rd party inspections

F) Get funded and close with a good title company.

G) Stabilize 12-24 months

H) Refinance with conventional financing and pay back your Bridge/HML.

Note: Don't expect cash back financing unless using a conduit lender. If they do give it to you, they may still make you keep the cash in escrow for 1 year before releasing it.

-SK-