Hard money lender wants me to designate a “project manager” separate from my GC/agent

[Sean Haran]

Hello all! I am based out of Los Angeles and I'm working on a long distance BRRRR deal in the hilltop area of Columbus, OH. I am planning to use Longhorn Investments hard money loan to fund the project. They're asking that I designate a project manager who would be able to visit the site regularly, but is not the GC. I basically have no idea who to use and am looking for suggestions/anyone who has worked with them before (or another lender with a similar requirement). I really like the fact that Longhorn will fund up to 100% of purchase and rehab costs (up to 75% ARV), that's why I was going with them in the first place. I have spoken to some other hard money lenders and most require 10-20% of the purchase price as a down payment. I have the cash but obviously if I don't have to put it down I'd rather not. At a crossroads now as to whether I should try to find someone who I can at least list as project manager (I have no clue if they actually would be contacting this person regularly or require really anything from them) or if I should just use a lender with less stringent requirements but that will require at least 10% of purchase as a down payment. Any advice/stories about a similar situation would be much appreciated!

[Chris Seveney]

Quote from @Sean Haran:

Hello all! I am based out of Los Angeles and I'm working on a long distance BRRRR deal in the hilltop area of Columbus, OH. I am planning to use Longhorn Investments hard money loan to fund the project. They're asking that I designate a project manager who would be able to visit the site regularly, but is not the GC. I basically have no idea who to use and am looking for suggestions/anyone who has worked with them before (or another lender with a similar requirement). I really like the fact that Longhorn will fund up to 100% of purchase and rehab costs (up to 75% ARV), that's why I was going with them in the first place. I have spoken to some other hard money lenders and most require 10-20% of the purchase price as a down payment. I have the cash but obviously if I don't have to put it down I'd rather not. At a crossroads now as to whether I should try to find someone who I can at least list as project manager (I have no clue if they actually would be contacting this person regularly or require really anything from them) or if I should just use a lender with less stringent requirements but that will require at least 10% of purchase as a down payment. Any advice/stories about a similar situation would be much appreciated!

 The GC does not represent you. They want someone with eyes and ears onsite for you because you being that far away how do you know the work is being correctly performed?

[Andrew Postell]

@Sean Haran I have used Longhorn many times.  Love working with them.  Would certainly understand this position though.  

There is always this question that is debated of "What's the best market to invest in if you are investing out of state?"  

Usually the answer is in the form of another question - "Where do you know someone that will protect your investment?"

As a 15 year, out-of-state investor my recommendation is to ALWAYS choose whatever city you have the most trustworthy contacts in. Keep in mind that you may never see your asset. That's an ENOURMOUS amount of trust/money to put into a stranger's hands. What I mean here is that if you know someone in a "City X"...but that city may not have as good as numbers as "City Y"...then stick with "City X"...the city where you know people. One wrong move, one wrong contractor, one wrong vendor…will erase any "benefit" one city has over another. Your network is the most important piece for any potential returns when you invest out of state.

And please don't hear what I'm NOT saying - I'm not saying don't invest in Columbus.  What I am saying is that you should absolutely, 100% get someone that you trust to manage your property for you.  Even if another lender won't require it...I would highly recommend to have someone that is local to help with this.  Even AFTER your property is completed. 

Hope this makes sense how I am describing this.

[Remington Lyman]

Quote from @Sean Haran:

Hello all! I am based out of Los Angeles and I'm working on a long distance BRRRR deal in the hilltop area of Columbus, OH. I am planning to use Longhorn Investments hard money loan to fund the project. They're asking that I designate a project manager who would be able to visit the site regularly, but is not the GC. I basically have no idea who to use and am looking for suggestions/anyone who has worked with them before (or another lender with a similar requirement). I really like the fact that Longhorn will fund up to 100% of purchase and rehab costs (up to 75% ARV), that's why I was going with them in the first place. I have spoken to some other hard money lenders and most require 10-20% of the purchase price as a down payment. I have the cash but obviously if I don't have to put it down I'd rather not. At a crossroads now as to whether I should try to find someone who I can at least list as project manager (I have no clue if they actually would be contacting this person regularly or require really anything from them) or if I should just use a lender with less stringent requirements but that will require at least 10% of purchase as a down payment. Any advice/stories about a similar situation would be much appreciated!

 I recommend asking an licensed inspector to do this for you. See if the home inspector you are using for this purchase if they will do draw inspections for you

[Jimmy Lieu]

Quote from @Sean Haran:

Hello all! I am based out of Los Angeles and I'm working on a long distance BRRRR deal in the hilltop area of Columbus, OH. I am planning to use Longhorn Investments hard money loan to fund the project. They're asking that I designate a project manager who would be able to visit the site regularly, but is not the GC. I basically have no idea who to use and am looking for suggestions/anyone who has worked with them before (or another lender with a similar requirement). I really like the fact that Longhorn will fund up to 100% of purchase and rehab costs (up to 75% ARV), that's why I was going with them in the first place. I have spoken to some other hard money lenders and most require 10-20% of the purchase price as a down payment. I have the cash but obviously if I don't have to put it down I'd rather not. At a crossroads now as to whether I should try to find someone who I can at least list as project manager (I have no clue if they actually would be contacting this person regularly or require really anything from them) or if I should just use a lender with less stringent requirements but that will require at least 10% of purchase as a down payment. Any advice/stories about a similar situation would be much appreciated!

Hi Sean, I have a lot of experiencing doing 6 figure renovations and managing ton of projects for my out of state clients. I would strongly recommend using a project manager or boots on the ground to manage your rehab especially if you're OOS. You shouldn't let your GC run wild and do whatever they want - tons of things can go wrong. I have a few referrals in the Columbus that I would be more than happy to send over. Happy to connect and answer any questions you have.

[Robert Ellis]

Quote from @Sean Haran:

Hello all! I am based out of Los Angeles and I'm working on a long distance BRRRR deal in the hilltop area of Columbus, OH. I am planning to use Longhorn Investments hard money loan to fund the project. They're asking that I designate a project manager who would be able to visit the site regularly, but is not the GC. I basically have no idea who to use and am looking for suggestions/anyone who has worked with them before (or another lender with a similar requirement). I really like the fact that Longhorn will fund up to 100% of purchase and rehab costs (up to 75% ARV), that's why I was going with them in the first place. I have spoken to some other hard money lenders and most require 10-20% of the purchase price as a down payment. I have the cash but obviously if I don't have to put it down I'd rather not. At a crossroads now as to whether I should try to find someone who I can at least list as project manager (I have no clue if they actually would be contacting this person regularly or require really anything from them) or if I should just use a lender with less stringent requirements but that will require at least 10% of purchase as a down payment. Any advice/stories about a similar situation would be much appreciated!

 I wouldn't buy in hilltop and whoever is putting you there I'd love to know. it's one of the worst zips in central ohio and maybe one of the last to find existing inventory hence why the realtors sell it. I'd recommend looking at closer to downtown in the adjacent downtown zip codes like 43206, 43205, 43203, 43207, etc. if you can't find any look at building. we build in those zips and focus on newer inventory. I'm a licensed general contractor but I don't touch existing inventory just ground up. 

[Nicholas L.]

@Sean Haran

i have to ask - do you have specific properties identified yet, or are you just working on lending?  have you been to this neighborhood in person?

are you planning to personally oversee your project?  are you going to go there in person regularly?  do you have a team identified?

we just see so many threads on BP from OOS investors trying to do everything from Internet and it can easily turn into a disaster.

i also see that you're trying to borrow as much as possible... which just puts a lot of pressure on your return because it makes the project more expensive.

maybe you're set up for success but i just figured i'd ask. i BRRRR locally and have a tough time doing it...

[John Bui]

Please share Longhorn's contact

[Sean Haran]

Quote from @Remington Lyman:

Quote from @Sean Haran:

Hello all! I am based out of Los Angeles and I'm working on a long distance BRRRR deal in the hilltop area of Columbus, OH. I am planning to use Longhorn Investments hard money loan to fund the project. They're asking that I designate a project manager who would be able to visit the site regularly, but is not the GC. I basically have no idea who to use and am looking for suggestions/anyone who has worked with them before (or another lender with a similar requirement). I really like the fact that Longhorn will fund up to 100% of purchase and rehab costs (up to 75% ARV), that's why I was going with them in the first place. I have spoken to some other hard money lenders and most require 10-20% of the purchase price as a down payment. I have the cash but obviously if I don't have to put it down I'd rather not. At a crossroads now as to whether I should try to find someone who I can at least list as project manager (I have no clue if they actually would be contacting this person regularly or require really anything from them) or if I should just use a lender with less stringent requirements but that will require at least 10% of purchase as a down payment. Any advice/stories about a similar situation would be much appreciated!

 I recommend asking an licensed inspector to do this for you. See if the home inspector you are using for this purchase if they will do draw inspections for you

 Thank you for this, this is what I ended up doing. The property manager I’m going to use actually also does this as well, I didn’t have any idea! 

[Remington Lyman]

Quote from @Sean Haran:

Quote from @Remington Lyman:

Quote from @Sean Haran:

Hello all! I am based out of Los Angeles and I'm working on a long distance BRRRR deal in the hilltop area of Columbus, OH. I am planning to use Longhorn Investments hard money loan to fund the project. They're asking that I designate a project manager who would be able to visit the site regularly, but is not the GC. I basically have no idea who to use and am looking for suggestions/anyone who has worked with them before (or another lender with a similar requirement). I really like the fact that Longhorn will fund up to 100% of purchase and rehab costs (up to 75% ARV), that's why I was going with them in the first place. I have spoken to some other hard money lenders and most require 10-20% of the purchase price as a down payment. I have the cash but obviously if I don't have to put it down I'd rather not. At a crossroads now as to whether I should try to find someone who I can at least list as project manager (I have no clue if they actually would be contacting this person regularly or require really anything from them) or if I should just use a lender with less stringent requirements but that will require at least 10% of purchase as a down payment. Any advice/stories about a similar situation would be much appreciated!

 I recommend asking an licensed inspector to do this for you. See if the home inspector you are using for this purchase if they will do draw inspections for you

 Thank you for this, this is what I ended up doing. The property manager I’m going to use actually also does this as well, I didn’t have any idea! 

 I recommend using someone other than your property manager

[Michael Smythe]

@Sean Haran a great PMC should be able to provide this service.

Just make sure they are COMPETENT enough to do so!
- What construction/renovation background can they prove or take a great game about?

[Scott Allen]

@Sean Haran It sounds like they understand that you have a GC you're going to be using to get the project done. They want you to have a project manager or someone local here that can check on your project/GC's work weekly to make sure things are being completed and a GC isn't just saying their doing a bunch of work but not actually doing anything. You might be able to make an agreement with the person who is helping you purchase the property to check on it weekly/video calls with you and compensate them for going out. This lender wants boots on the ground to make sure the project gets completed as planned. BRRRR's/flips can be tougher to perform without a proper team making sure it gets done.

[Erik Estrada]

Quote from @Sean Haran:

Hello all! I am based out of Los Angeles and I'm working on a long distance BRRRR deal in the hilltop area of Columbus, OH. I am planning to use Longhorn Investments hard money loan to fund the project. They're asking that I designate a project manager who would be able to visit the site regularly, but is not the GC. I basically have no idea who to use and am looking for suggestions/anyone who has worked with them before (or another lender with a similar requirement). I really like the fact that Longhorn will fund up to 100% of purchase and rehab costs (up to 75% ARV), that's why I was going with them in the first place. I have spoken to some other hard money lenders and most require 10-20% of the purchase price as a down payment. I have the cash but obviously if I don't have to put it down I'd rather not. At a crossroads now as to whether I should try to find someone who I can at least list as project manager (I have no clue if they actually would be contacting this person regularly or require really anything from them) or if I should just use a lender with less stringent requirements but that will require at least 10% of purchase as a down payment. Any advice/stories about a similar situation would be much appreciated!

 Hey Sean, 

I would first look at the cost of the loan. Usually these 100% financing loans have high points and fees along with an absurd rate. So it may be costing you more than just putting some skin in the game and recouping it back on the refinance or sale. 

I have never heard of a hard money lender requiring this. If you are a first time investors, most hard money lenders will require you to work with a GC. But there are no other strings attached. 

If you are experienced, you could do the renovations yourself. 

I am curious to know if you ended up closing on this? 

[Ryan Stuckey]

Quote from @Erik Estrada:

Quote from @Sean Haran:

Hello all! I am based out of Los Angeles and I'm working on a long distance BRRRR deal in the hilltop area of Columbus, OH. I am planning to use Longhorn Investments hard money loan to fund the project. They're asking that I designate a project manager who would be able to visit the site regularly, but is not the GC. I basically have no idea who to use and am looking for suggestions/anyone who has worked with them before (or another lender with a similar requirement). I really like the fact that Longhorn will fund up to 100% of purchase and rehab costs (up to 75% ARV), that's why I was going with them in the first place. I have spoken to some other hard money lenders and most require 10-20% of the purchase price as a down payment. I have the cash but obviously if I don't have to put it down I'd rather not. At a crossroads now as to whether I should try to find someone who I can at least list as project manager (I have no clue if they actually would be contacting this person regularly or require really anything from them) or if I should just use a lender with less stringent requirements but that will require at least 10% of purchase as a down payment. Any advice/stories about a similar situation would be much appreciated!

 Hey Sean, 

I would first look at the cost of the loan. Usually these 100% financing loans have high points and fees along with an absurd rate. So it may be costing you more than just putting some skin in the game and recouping it back on the refinance or sale. 

I have never heard of a hard money lender requiring this. If you are a first time investors, most hard money lenders will require you to work with a GC. But there are no other strings attached. 

If you are experienced, you could do the renovations yourself. 

I am curious to know if you ended up closing on this? 

You're not quite as knowledgeable on this topic as you think you are. Longhorn has been doing 100% financing for 16 years with 8000+ closed loans and has a stellar reputation and many, many repeat customers. The rates/fees are not at all absurd and are right in line with 100% financing being a bit riskier than the typical 10-20% down on purchase. And there is a loyalty program after three paid off deals in good standards where rates/fees drop nicely to beat the 10-20% down programs.

Longhorn is also experienced enough (and looking out for the customer) to know that long-distance investors solely relying on a GC to stay on time and on budget can lead to problems. A bad first project for a new investor can mean the end of his or her REI career. Longhorn does not push bad deals and bad situations onto borrowers, it's better for all to turn down such deals.

[Erik Estrada]

Quote from @Ryan Stuckey:

Quote from @Erik Estrada:

Quote from @Sean Haran:

Hello all! I am based out of Los Angeles and I'm working on a long distance BRRRR deal in the hilltop area of Columbus, OH. I am planning to use Longhorn Investments hard money loan to fund the project. They're asking that I designate a project manager who would be able to visit the site regularly, but is not the GC. I basically have no idea who to use and am looking for suggestions/anyone who has worked with them before (or another lender with a similar requirement). I really like the fact that Longhorn will fund up to 100% of purchase and rehab costs (up to 75% ARV), that's why I was going with them in the first place. I have spoken to some other hard money lenders and most require 10-20% of the purchase price as a down payment. I have the cash but obviously if I don't have to put it down I'd rather not. At a crossroads now as to whether I should try to find someone who I can at least list as project manager (I have no clue if they actually would be contacting this person regularly or require really anything from them) or if I should just use a lender with less stringent requirements but that will require at least 10% of purchase as a down payment. Any advice/stories about a similar situation would be much appreciated!

 Hey Sean, 

I would first look at the cost of the loan. Usually these 100% financing loans have high points and fees along with an absurd rate. So it may be costing you more than just putting some skin in the game and recouping it back on the refinance or sale. 

I have never heard of a hard money lender requiring this. If you are a first time investors, most hard money lenders will require you to work with a GC. But there are no other strings attached. 

If you are experienced, you could do the renovations yourself. 

I am curious to know if you ended up closing on this? 

You're not quite as knowledgeable on this topic as you think you are. Longhorn has been doing 100% financing for 16 years with 8000+ closed loans and has a stellar reputation and many, many repeat customers. The rates/fees are not at all absurd and are right in line with 100% financing being a bit riskier than the typical 10-20% down on purchase. And there is a loyalty program after three paid off deals in good standards where rates/fees drop nicely to beat the 10-20% down programs.

Longhorn is also experienced enough (and looking out for the customer) to know that long-distance investors solely relying on a GC to stay on time and on budget can lead to problems. A bad first project for a new investor can mean the end of his or her REI career. Longhorn does not push bad deals and bad situations onto borrowers, it's better for all to turn down such deals.

 Hey Ryan, 

I respect your company and would appreciate the same. My post was not geared to insult your company, but only provide insight on my previous experience working with 100% financing lenders. I have found that it is much more expensive to go this route than to put some skin in the game and go with less costlier loan. In no way was it targeting your company specifically. I would not doubt you have some of the best programs out there given the company's 16 years of experience in the business. 

I understand your risk tolerance and it makes complete sense. For some investors it may not work for them, and you have the right to turn down such deals. There are lenders that do not have these requirements and if an Investor decides this is the path they would like to pursue, that is their decision. 

The main message here is look at the bottom line and decide from there.