New Into - Hard Money Question

[Scott Barber]

Hello All, 

I am "new" and wanted to say hi to everyone. I have been part of BiggerPockets for some time now but have not done a proper intro. My future focus/goal is for long term buy and hold units. I would like to start out with single family and move to multifamily. I am a combat vet that is now in purchasing. 

I would like to start with a little discussion and get some input from others... 

I need some help with getting started and using hard money. Would anyone start out with hard money even if that meant you didn't take profits for some time (no definition on "some time")? I know a lot of people would look at this as a little odd, however, I am looking to get my feet wet and figured if I find a good deal, finance it with hard money, take a loss for a hand full of years (due to typical high interest rates with hard money) and then get a traditional loan later, would you do it? 

Thanks for the input in advance.

[Barry Ingram]

Scott, the advice you are getting is right on. Hard money and buy and hold are not the best marriage. They can make it work, but short term thinking is going to be the best. 

Here is a post I made on being successful with Hard Money Lenders.

---

If you want to be successful and have a better chance of getting a response and hence getting the funds you need from a hard money lender.

I want to suggest some details you should consider having when you make your request.

Must Haves

1. Property Type
2. Purchase Price
3. ARV
4. Cost of Repairs
5. How much cash you have on hand to use in the deal
6. Your credit score
7. How many flips you have done within the last year
8. City and State of property
9. Do you have a contract? If not, give details on why you expect to get the contract

Should Haves

1. Did you physically see the property
2. Do you have partners
3. How was the ARV determined
4. Do you have an appraisal or BPO
5. If it's a rental unit, does it have renters, how close do you live, will you be managing it
6. What is your exit strategy? Fix and Flip...Fix and Hold....BRRRR...etc
7. How were the costs of the repairs determined
8. Do you have the funds to start the project and make it to through the first draw (if the loan is setup that way)

Things that make the lender feel better

1. What is your net worth
2. Will you be the general contractor or will you hire one
3. If your credit score is low, do you have bankruptcies
4. What is the expected time frame to finish the renovations

Remember in hard money lending we feel that each deal should be a win-win-win, so we want to do the deal to help you get started on your project and help our lenders make money. We want to offer our lenders deals that show that risk is mitigated as much as possible.

Be sure that you know what fees you are haggling over. If you are going back and forth about high points between two lenders and miss the extra "fees" that might be charged by one, you are missing the point. For example we don't have any "application fees", etc.Know exactly how much you need to close and how much you will spend for the money by the time you expect to exit....compare apples to apples.

Barry Ingram, 770 Hard Cash - Private Money Lender