Hard money lender advice

[Kionnon Harris]

Hi, I'm a new investor and I have been looking into hard money lenders for my first flip. I spoke with a company and they stated that for first time borrowers they would require a down payment of $10- $20 thousand dollars and that the payments are interest only with no Pre payment penalties. My only question is they said that the points and fees are charged on the back end. Is that normal or should be a little cautious. I've done some research on hard money lenders but this is the first time I've seen this be said. I haven't decided on a house yet I'm just trying to do my due diligence before jumping in head first. 

Thank you, 

Kionnon 

[Evan Wiesner]

Every lender has their own deal. Most HML's are smaller groups who have pooled or raised funds and they are often beholden to where the money comes from. Hence, the money dictates what their deal structure is.

In many cases the fees are split, some up front and some cut out of the deal. If it's on the back end you can probably be sure they'll record a deed of trust which in some states will cost you more. Some are more traditional with a monthly mortgage payment. It's all in the research you do.

When you do decide upon a funding source, be sure you know your deal structure inside and out and overestimate your numbers on the hold time. It's almost a guaranty that you'll run longer on the remodel and probably over budget by some. It's better to be wrong on the long end financially than on the short end and walk away with nothing at closing.

Good luck Kionnon!