All Forum Posts by: Ben Stoodley

Hey @Jordan Santiago,

Nice goal! I do agree with Scott though, hard money is typically not a good idea for rentals or anything long term (2-3 year max). What I see a lot of my clients doing is using hard money to take down the property quickly, make the renovations, raise the rents, then refi about 12 months later. This gives you time to find a solid bank loan for the long term with low interest rates. When you refi, you will cash some out too typically. It's referred to on here as the BRRRR method, highly effective!

Hey @Nate Wilson,

Both investment options are great ones! Multifamily/Apartments are my personal fav. I also run a hard money fund that my partners and I founded about 16 months ago. I'd be happy to answer any questions. Like I said, both are fantastic investment choices, but VERY different from one another. It all depends on your goals. I am also originally from Maine, so I know the New England are very well and there are some great markets around there!

How'd everyones' Monday go?? If you're like me and love what you do, than it was probably a pretty great day. I own a hard money company and we are looking to poll the investors for some new loan product ideas. I hear about the same sort of financing issues that keep popping up, so I'd like to get some other people's perspective on this.

WHY DO OR WHY DON'T YOU USE OTHER PEOPLE'S MONEY (OPM) TO CLOSE DEALS?

...There are numerous programs out there that teach new investors to flip with no money out of pocket. Do you agree? Is this a good investing strategy? 

@Chase Maher would be an excellent resource for you !

Hey Huy Thai great questions and mostly fully answered already. You can see that there are a few MAIN points to focus on, rest is variable based on your location, experience and finances. 1.) Rates depend on the strength of the project and the experience of the Borrower. So if you are comparing two lenders at two different LTVs, the higher LTV is more risky and therefore more expensive. Same with experience. Lenders want to be protected by good deals and good borrowers. Rates maybe higher for inexperienced borrowers. The location of the property also affects rates. In California rates go as low as 7%!! This is because the market is so competitive. You can see other responses say 12% is normal - I haven’t seen a 12% deal in CA in 3 years. 2.) Given those location, deal strength and experience factors - it really comes down to relationship with lenders. It’s worth paying MORE for lenders that know what they’re doing. Go with reputable lenders that industry colleagues recommend. You want lenders to work with you on rates as your bring them more deals. 3.) Just never pay anything out of pocket - points and fees are taken from the proceeds of the loan funding. Ask for ALL junk fees, it should total under $1000. And go with DIRECT lenders as they will be the most experienced and FASTEST, which is very helpful in the competitive industry of RE Investing Remember, Lenders are ON THE SAME SIDE as you, they don’t want to lose their money, and I assume you don’t want to lose money either. So their experienced underwriting opinions can prove to be very valuable. Best of luck!!

Hi @Account Closed 

I think I'd would need to know more about your goals and your current financial strength to better answer this. In other words, bigger nationwide companies DO tend to have better rates, but require many more hoops to jump through in order to fund. This causes longer lead times/close times, possibly more "junk fees", personal guarantees, stricter repayment structures, etc. Local lenders on the other hand, maybe able to work with you better and be more open and receptive to working with newer investors (many nationwide lender don't work with new investors OR charge much higher rates). I would recommend going with a local lender that someone has a relationship with, so they can refer you based on their experience. Always look out for junk fees (need to ASK them specifically for ALL other fees), how interest rates are calculated (drawn portion only or full loan amount), prepayment penalties, extensions, etc. Hope this helps, good luck! 

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Hey @Kat Malkowski - I think everything you absolutely need to know about HML was said clearly by @Nghi Le above. HMLs that you want to work with will NEVER charge upfront fees. Also, 100% financing is a very risky and likely scammy type of loan to offer, likely due to an inexperienced(at best)lender. 

Always confirm amount of junk fees as well. Many lenders will say 2-3 points but then leave out the $1500-$3500 in junk fees that you pay as well. Prepayment penalty may be an important factor for you as well, depending on your exit strategy. 

Personally, ask around in your local RE Investor community, and here on BP of course, for referrals to HMLs. There are good ones out there, we do exist! ;-)

Good luck!

Hi Joe LaGreca and Christina M Viola great question! I've written a few articles on this. There's been many great tips already posted. In my experience, it's dependent on the Borrower's priorities. Having the ability to offer different loan structures may be good for some borrowers looking to grow their businesses. The lower the rates the better, and it should be weighted against the experience and service provided. Feel free to reach out for more tips. Thanks and good luck!

Hey Matthew Orme that's a great strategy. We've financed projects where the borrower covers the down payment with their SDIRA, it is pretty much the same process. If you'd like help on finding the right lender, feel free to reach out, in addition to the abundance of awesome info found here on BP. Couple tips while conducting your HML source - make sure they're Direct Lenders and confirm all fees associated with the loan. Every lender is different and therefore all loans are structured different. Things like not charging the interest on the fund control amount vs the entire loan amount, prepayment penalties, extension fees, etc. And most of all - reputation! Ask for referrals. Hope this helps!