Advice on a possible deal

[Brandon Bellino]

So this is mostly just going to be hypothetical, since I'm not in a place right now where I'd actually be able to complete a deal. I'm simply using this as a way to learn, and get some good tips and advice for the future. 

With that being said, I found what could be a great flip opportunity here in my city. I found a REO property online being sold for $14,300, that's the transfer value anyway, and it looks like it's in good condition at least on the outside. It is a 3 bedroom, 1 1/2 bath 1,280 SF single family home, with comparable homes in the same area selling for around $80-90k. Now I do not know what the inside looks like, but assuming it would need a total redo on everything cosmetic - flooring, painting, bathrooms, kitchen, I would say $30,000 would do it. Now I'm sure someone will ask where I got $30k, I know a few different local investors that I have rented apartments from, and they both said cosmetic rehabs like the one I described usually take around that much, assuming major repairs don't pop up like electric, plumbing, and things like that.

Now, I have a few questions I'd like some advice on: 

1. If I had a good enough credit score, and enough money saved up for a down payment, where would be a good place to find a hard money lender? I searched online, but I live in central New York, and the only lenders that came up were in NYC. 

2. Is the $14,300 listed price the amount the bank will actually sell the property for or is it like a "starting bid" sort of thing like they use on auction sites? Would it be best to contact the bank who owns it and offer an amount above or below this price? 

3. Can anyone offer some insight on borrowing from hard money lenders? If I was actually looking to make this deal happen, based on the amounts I described and would need to borrow, how much "skin in the game" would most lenders expect? What credit score is the standard minimum, if any? 

[Ann Bellamy]

@Brandon Bellino, just because in my area, HML usually charge more for a first deal, it doesn't mean that is the case in other areas. Or with other lenders.

Hard money rates vary from region to region and from lender to lender.  Same with requirements.   HMLs are commercial lenders, so set their own requirements, there are no consistent norms.  

Find local REIAs and investor groups in your particular area.  You can find them by Googling and on Meetup.  Maybe on Facebook.  Attend and ask around for local (to you) lenders.  Call them and ask their requirements.

It's always better to use local than national.  National lenders usually charge more in part to compensate for their lack of local knowledge.  They also will generally commission an appraisal, which costs time and money and is frequently inaccurate anyway.  With local you can develop a relationship.  It's hard to develop a relationship with an automated phone answering system.

So look for local first by asking local real estate investors.  then if you are forced to, go regional.