Teach me about Hard Money.

[Mario Cuartas]

Hello Everyone, I am looking for some education on Hard Money. When I purchase a property with hard money, do I still have to wait for 6 months before I can refinance? Or is hard money considered the same as cash, so technically i can refinance when ever I want? Are there any hard money loans that do not require payment per month, but rather at the end when you sell the flip or when you refinance out? What are other aspects of hard money loans that I should watch out for? Also, has anybody ever used hard money lenders that advertise on Bigger Pockets? are there any recommendations for hard money or private money lenders in Missouri? 

[Andrew Holmes]

@Mario Cuartas

@Ben Stoodley - Covered a lot of good points. 

1. Wether you have to wait 6 months on seasoning will depend on if you do a refi with a residential lender or commercial lender. A residential refi on a rental property will NOT require a 6 month seasoning but ONLY the amount of loan principal + Rehab loan that you look on the front end will be able to be refied. Example if you borrowed $ 100K for purchase + 30K for rehab then that will get refinanced within 6 month with a Residential rental product. Another thing to keep in mind is that generally you will get the refi amount 75 % appraised value or initial loan. (LOWER OF THE 2 Amounts) Basically you can do a rate and term refi in less that 6 months. A cash refi will require a 6 month hold time. 

Commerical lenders to the most extent are making you wait for 6 month seasoning. This was not the case pre corona crisis. The 6 month requirement will be waived if you have a small bank that you have a relationship with in your area. Most large commercial lenders are making you wait if you want to refi and get 75% of of appraised value. (This 6 month requirement will soon go away but the products are not yet released but very soon will be available)

2. All Hard money lenders will require monthly payment only exception will be some private lenders if you know them may let you pay at the time or refi or flip.