'Hard' Decision with a 'Hard Money Lender' *FIRST TIME FORUM USER

[Lain McCanless]

Hey everyone! This is my first time posting on the forum! So as of an hour ago I just went under contract for my first condo. My partner and I were thinking about financing ourselves but our realtor encouraged us to find a hard money lender. We found someone I know who is interested but I really don't want to mess up the pitch. Can you give me the playbook of things I need to be able to tell him? Basically, we are needing 50K for a downpayment and repairs. We are doing the repairs ourselves so we have skin in the game. He is asking us to bring our A-game with the presentation and is even open to letting us pick the percentage rate. To give you context, it is a 132K property that has an ARV of 210K. We are considering selling right after renovations or potentially doing a Vacation Nightly Rental.

Thank you in advance! Also, we only have 10 days to figure out if we want to finance ourselves or get the Hard Money Lender so time is of the essence! 

[Daniel J Cano]

Provide them with the rehab costs. Be ready to tell them who will be rehabbing (subs or a GC) if all work is being done by you, I'd be ready to tell them what experience you have in rehabbing. Make sure you understand the proper way to rehab (plans, if needed, permits, inspections etc). Will you be subbing out specific trades? Electrical and plumbing are special trades that require someone who knows what they're doing. Otherwise you'll end up with a burnt down, or flooded house. Make sure you have bids lined up. Be sure to provide them with comps. If it's a condo, I advise you use rehabbed comps within that SAME HOA (last 6 months only). KNOW YOUR NUMBERS!

They're going to ask how will their money be secured. You'll need to figure out what assets you can cross collateralize. or provide a personal guarantee? Whatever floats their boat.

Be sure you understand how many points they are charging you, what the interest rate is, term of the loan etc. Remember hard money loans aren't the same as FHA insured/ conventional loans.

Good Luck!