Fact check my understanding about hard money lenders/brrrr

[Arturo Romero]

Hello bigger pockets forum!

I am a new investor (no property’s yet) but I’ve been studying real estate investing for over a year now.

My understanding of hard money lenders and their process goes as follows:

1.You get a hard money loan for the price of the house and the rehab costs.

2. You rehab the home within a certain amount of time being 6 to 12 months on a high interest loan with two or three points.

3. You cash out refinance and being that your estimated ARV is correct, you pay back your hard money lender and use the rest of the money to invest in another property..

Is there something I’m missing? Is there any fees or costs that I’m missing?

[Odie Ayaga]

That's both a little too specific and a little too general. 

Hard money loans are typically 2-4 points 8-12%...could be more, could be less. I've seen terms as short as 3 months and longer than 12. There are fees and costs, but they vary from lender to lender. There's typically an appraisal cost, draw fees/costs, extension fees, closing costs etc.

Cash out refis work the same regardless of the lender. You get a refi lender who gives you a percentage of either ARV or LTC and typically you'd use all or part of it to pay off your previous lender (ideally it would be enough to entirely pay off your previous lender plus more).