All Forum Posts by: Brian Rocha

@Brian Rocha -

Something to note is lenders will oftentimes slightly limit leverage on the purchase of a hard money loan or a "fix and flip" loan if you are doing borrower funded rehab. Limiting leverage, for any loan ever = reducing lender exposure/risk. So, the common person may ask - well how is me funding the rehab myself any more risky for the lender/why would they want to limit leverage? The answer is that if the lender that's doing the hard money loan is only funding the purchase and not the rehab, they then have less oversight of the project since they're not doing the draws, and thus not seeing the progress of the project and having control of the funds or draws from the rehab to make sure the project is progressing. I know for example we can fund up to 90% of the purchase and 100% of the rehab when we're funding the purchase and the rehab. If we're funding just the purchase, we fund up to 82.5% of the purchase price. Hope this helps!

@Brandon Croucier is giving you solid info on finding an experienced and honest mortgage broker who can shop your exact scenario both ways, with the rehab and without and break down the benefits of each with all fees so you can see an apples to apples comparison. 

Hope this helps!

Totally get it, and if I were reading that prospectus it would be an interesting and moderately helpful footnote, but it wouldn't be the foundation of what we'd be considering. 

Just off the top of my head, I wouldn't feel super comfortable with non-US properties because properties in the US are held to HUD code (at a minimum). But if you have 12 US properties, that's plenty to show in a resume/portfolio for any serious HML.

Hey Brian, 

Generally, a HML org will want to see some diligence around the contractor or get some idea of past work if you're doing the work yourself.

 Depends. We have done it both ways where we fund purchase and they cover rehab but if the individual is less experienced we do not do it that way, we have them put more money into the deal from the start and fund the draws, reason why is we also had a deal where the person said they would do this and never did anything and property sat and loan matured and it was a pain.

Just recognize you will still not get 100% financing for the purchase, so you are putting money in up front.