Hard money lenders in North Suburbs of Chicago

[Daniel Botvynko]

Hey everyone

I keep learning more about Real Estate and I was recommended to flip a house with very little money of my own. I was planning to start it in another state, however, if I can make this work, I can still do it in Illinois(with high property prices).

Can anybody recommend Hard Money Landers in the North Suburbs of Chicago? I want to learn much more before starting and that's what I am doing right now, so if you have any advice, I would appreciate that!

And there is another question if I take a hard money loan, do they lend you a little extra of your needs for a Rehab price? I have heard somewhere, that some lenders would lend you up to 85% of the house after the repair value, so if the house cost $250k and after the repair would be $350k, the lender can lend you up to $297.5k!

Please correct me if this info is not legit!

I would really appreciate your help!

[Tom Shallcross]

@Daniel Botvynko - Also a happy Renovo client here. Regardless of whom you use, you are going to need more money than you originally laid out. I love flipping and there are nice checks to be made in Chicago, but many folks underestimate the amount of capital needed to succeed.  

As a first timer, you'll prob get 70% ARV or 85% of LTC, whichever is less. Assuming the 350k ARV you mentioned is accurate, you'll get a loan of 245k. If your rehab is 50k that part will be held in escrow until drawn upon, so your original loan balance will be 195k (245k-50k). So you're bringing 55k to the closing table (actually more than thatonce you account for all fees).

In addition, you get your draw money once work is completed so you'll need working capital to order materials and then get reimbursed. You'll also need funds to pay your holding costs, a 245k loan at 8.5% interest only is $1,633/m plus taxes, insurance, utilities, landscaping...etc, so somewhere around 2k/m holding costs.  Lastly, if your budget ends up being 60k or 70k instead of 50k, you're coming out of pocket that difference so you'll need those reserves so you don't get caught stuck with an unfinished project. 

Add it all up and you probably need close to 80-100k to get this done through a HML, whether it's your money or a partner you bring in. This isn't to deter you, it's to prep you so you can succeed when you pull the trigger.