All Forum Posts by: Anthony Palmiotto

@Michael Doherty I've not seen that personally where a lender will "front" the entirety of construction funds. In my experience, all of the construction money is disbursed as the project in completed...the question being is interest charged on the entire amount from day, or as disbursed.

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"No doc" rental property loans are an increasingly popular product among hard money lenders where the loan is underwritten with a borrower's credit score and the property's cash flow. What is nice is that you can borrower in the name of an LLC, with high leverage, and rates that are extremely competitive. That, along with the ease and speed of closing, can make them an attractive product.

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Originally posted by @Ann Bellamy:

Kyle, while you are at those meetings, ask other people if they have done business with the person. @Jeff S. has given you good advice, and I also have a handout of questions to ask a hard money lender that I give when I speak on the topic in MA and NH. If you PM me I'll send it to you. Most of the comments are about fees, but the following are a few additional important points:

The reputation of the lender is super important. Ask around.
Back end fees: Specifically ask to find out if additional fees or percentages apply at the end of the loan
Excessive attorney costs: Many lenders, myself included, require that their attorney handle the title work and closing. That's fine when the costs are reasonable, but I'm aware of a couple whose attorneys charge 3000-5000 for a hard money closing. So the rates are low but the fees are high. Ask about this.
There is a difference when you are speaking to a direct lender, and a broker or loan originator. I know a few local brokers who take months to deliver a term sheet. You don't even realize they aren't the lender until you are weeks or months into waiting.
I also know lenders who change the terms at the closing table. What you were told, and what is in the loan docs, are two different things, and you don't find out until the closing when you are pretty much stuck.
So pretty much all of these come back to #1, reputation. It's super important.

These are great questions. I find that many times new investors get very caught up on interest rate and points but there is a lot more to it that that. My more experienced borrowers ask very different questions...often relating to the process, the timeline, the reputation of the company. Of course, rates and terms are important but they are not the only thing. Above all make sure you work with a lender that is reputable and has a clear and transparent process.

2 Votes

Originally posted by @Michael Doherty:

@Dan LaFontaine thank you. I did actually. I've used them before and everything is pretty straight forward. The only downside to hard money is the draw process. Every 'draw request' they send out an inspector and it costs around $250. We found ourselves having to front the initial rehab costs on our credit cards to pay the contractor time and materials and then reimburse ourselves with the draw monies.

However the good thing about the draw process... at least with our lender, is your only paying interest on the money you have used. For example, say your total rehab budget is 80k. Instead of paying interest on the full 80k from day 1... you only pay on the money you've withdrawn. Ideally you would try and limit it to just 1 draw but we didn't have the deep pockets to do it so we spread it out over 3 draws.

This is a fairly typical draw process for lenders, including both hard money lenders and any other construction loans. Many newer investors who are unfamiliar can be thrown off by this at first. Additionally, investors should make sure they pay interest only on funds dispersed, particularly for large reno budgets.

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An interest only loan is often associated with bridge financing/hard money loans. Other commercial loans can sometimes have an interest only period for a certain time. For example, you might have a 10 year Freddie Mac loan on a multifamily property with 3 years of IO.

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First Equity Funding is nationwide hard money/private money lender specializing in fix/flip loans for single family, multifamily, and mixed-use properties. These loans are for investment purposes only - no primary residences. Contact me to see if we can help you fund your deal!

Lending 80%-90% of the purchase price
Lending 100% of renovation costs
Interest rates starting in the 8's!
Interest only payments with no pre-payment penalty
Loan amounts $80,000 - $5,000,000+
Fast closings and simple documentation

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As a real estate investor, you probably know the difficulty in qualifying for a traditional 30-year mortgage for your rental properties. It can be a long difficult process and self-employed borrowers often do not even qualify! This product was specifically rolled out for investors like you. Some advantages include:

Rates starting in the mid 5's
Borrow up to 85%+ LTV on purchase or 75% LTV on a cash out refinance

No income verification or debt to income calculations
Can hold title in an LLC or in a personal name
Simple underwriting and fast closings
Can be used for purchases, refinance or cash out

Call/text Anthony today at 732-825-8095 or email at [email protected]

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Investment Info:

Large multi-family (5+ units) buy & hold investment in New Egypt.

Purchase price: $500,000
Cash invested: $125,000

10 Unit Multifamily Property

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Investment Info:

Small multi-family (2-4 units) buy & hold investment in Crosswicks.

Purchase price: $420,000
Cash invested: $126,000

4 Unit Multifamily Property

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Investment Info:

Single-family residence buy & hold investment in Ewing.

Purchase price: $183,000
Cash invested: $50,000

Single Family Student Housing Property

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All Forum Posts by: Anthony Palmiotto

Anthony Palmiotto has started 26 posts and replied 111 times.

Post: 1st Flip Turned 47k Profit!

Post: Quit Claim Deeds / Cash out refi on cash purchases within an LLC

Post: Is there anything to be aware of with hard money lenders?

Post: 1st Flip Turned 47k Profit!

Post: Interest only loan for property?

Post: Fix & Flip Financing - 80%-90% of purchase price & 100% of Reno!

Post: No Doc 1-4 Unit Rental Property Financing - Up to 85% LTV

Post: 10 Unit Multifamily Property

Post: 4 Unit Multifamily Property

Post: Single Family Student Housing Property