Can you have two Hard Money Loans on the same property?

Question

property is 150k i got 75k from 1 lender can i get 75k more from another lender to close the deal???

Jeff S. · Answer

Yes, Rah-sheen Blalock, you can have multiple loans on a property from one or more hard money lenders.  There's no limit.  Your state could be different, but it's your property and a lender cannot generally prevent you from taking out a loan behind theirs.  They can put a clause in their note that calls their loan due if you do take out a subordinate loan, but they cannot normally prevent you from doing so.  A nuance to be sure, but you should know the difference.  Not all hard money lenders care.  Nor can you generalize, since HML terms are regional.

Most of the hard money lenders I know allow 2nds, though few will want to be in second position alone.  Some lenders will have no problem loaning rehab money as a 2nd so long as they also loaned the 1st position purchase money.  Others won't care where a borrower gets the 2nd, or why.  Note that this doesn't mean they won't require you to have some skin in the game, and I question whether you could get funding for the deal you presented with the info provided.

Hard money lenders are as different as fingerprints and, within the bounds of the law, are generally free to set their terms. You really can't assume they won't allow a second.

When in doubt, ask the lender.

Jon Holdman · Answer

Probably not.  Few hard money lenders will make a second  position loan because of the very high risk.  Some who will lend in first position will not allow a second position loan or any other lien to be placed against the property.

You might be able to borrow against a different property or get some sort of unsecured loan to fund the remainder of your rehab.

I'm dubious you have much of a deal if you're paying $150K and a HML is only willing to lend $75K.  But perhaps there are other factors involved.

Account Closed · Answer

Technically and legally you can, and if you do please connect me with that lender.  It will probably never happen, unless you know them really well.

I had a HML take a 2nd a few times, but it only happened when they were the lender or homeowner being paid off from a sale and the appraisal came back too low so a bank wouldn't fund the entire price.  So the HML would take a 2nd for the difference.  But that was a bank loan in 1st and the HML in 2nd and the 2nd usually wasn't for very much, only a few thousand.

Rah-sheen Blalock · Answer

thanks to all my fellow bp'ers that responded you have given me more insite than you know, @Jay Hinrichs @John Skaggs @David T. how good is the stuff youll got down their in atlanta...hahaha in ny the mix might kill ya @Jeff S i will ask the lender and see where it goes thanks @Ryan Harthan  @Andy Collins im hearing the area is already saturated with HML's

Andy Collins · Answer

What did the property appraise for?  Normally hard money lenders will loan about 70% of ARV,,,if its a $150k deal, why did the first lender only lender $75k?

Ryan Harthan · Answer

I guess if you just basically stole the property when you bought it theoretically a second lender could cash out refi you and take the first position lien holder..... That's kind of a tough one, most lenders are going to want to see you have solid figures up front.  Going back in and needing more money is typically going to come out of your pocket.

David T. · Answer

There were plenty of bank seconds during the boom and were being offered at 2c on the dollar during 2010. Giver your HML the right mix of weed, booze and pills and I bet he'd think about it for a few seconds!

Best of luck with that one!

Jay Hinrichs · Answer

Possible but not likely but if you did you would simply have a first and a second

Rah-sheen Blalock · Answer

seth you the best, how about a 15 year old son

Can you have two Hard Money Loans on the same property?

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