All Forum Posts by: Account Closed

When applying for a hard money loan, make sure you understand all numbers are going to be estimates until all of the variables are completed and final numbers are calculated. The hard money lender might be able to give you an idea of the amount of money needed for closing but it’s only going to be an estimate. You should always expect to bring some money to closing.

Even though hard money loans don’t usually require a set down payment, it is almost unheard of where the investor borrower will get 100% financing with absolutely no money into the deal. Investor borrowers should always anticipate and expect to have some money into the deal.

Final numbers are determined once the appraisal is received, the scope of work figures (when applicable) are finished, and closing costs and fees are finalized. At this point a specific dollar figure can be given to the borrower. Until this point of the process all numbers are going to be estimates.

Do you have hard money loan tips or questions? 

@Account Closed welcome to Kansas City investing!

@Gary O. a hard money lender is generally going to go off the property and deal itself  rather than the borrower, aka asset based lending.

So the key to getting a hard money, or private loan is going to be the deal itself. If you have a solid deal, and legit exit strategy, you should be able to find the funding.

Good luck!

Be efficient. Be patient. Be concise. And success will follow....

Allow the lender time to look at and respond to your loan request. Don’t inundate the lender with a barrage of emails or messages. The lender should be responding to your request within the timeline the lender has set forth. If there is not timeline then simply ask the lender when it expects to respond to your request.

When a borrower makes a submission to a lender for a loan consideration, it’s important the borrower submit the information the lender has asked for and in a manner that is easy to dissect.

The borrower needs to include all of the relevant information, no “piece-mailing”, and don’t submit too much or random information.

Do you have hard money loan tips or questions? 

@Charles Worth I am seeing points in the 4-8 range and 12% annual interest. There is a wide range though, and much of it depends on where you are seeking the funding at. For example I know for a fact hard money is much less expensive in California than the Midwest. 

@Mike D'Arrigo no doubt every deal has to stand on it's own and make sense.  I think the point of the article is more related to getting investors to think outside the box when it comes to finding financing options for their investments. 

Thanks!

Many investors hit a big brick wall when it comes to financing their investing business. Financing options are important because your plan might be hard to get off the ground without financing in place. While it’s possible (sometimes) to do investing without a lot of cash or credit, you should expect to need some cash, credit, and financing at some point of your investing business. Most investors regularly utilize some type of financing for their investments. You need to seek out and discover all of the financing options available to you today.

Want to learn about financing options and MORE...

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Let’s talk soon!

– JJ Pawlowski

It's best to have part of something than all of nothing. You can opt not to do a deal because you don’t want to pay any fees but then you have nothing. If you have a deal in which you can make a profit or expect to do so, you might incorporate the hard money lender’s fees as just another expense of the deal and still see your profits. Ultimately it’s up to you!

The definition of “expensive” is different in each investor’s mind. One investor may say a hard money loan is expensive while another investor jumps at the chance to use other people’s money (OPM) to make an investment and realizes the fee and or interest is just part of doing business. Many banks and traditional lenders do not make the types of loans a hard money lender will make so unless he or she is a cash buyer most investors are somewhat limited to the resources available for these types of investment purchases.

No one is forcing you to accept what a hard money lender is offering. You don’t have to do the deal.

For more tips on working with hard money lenders, download our free Hard Money Ebook - 19 Mistakes Investors Make in Working with Hard Money Lenders. You can find this and more HERE

Want to Learn More About Hard Money Loans?

Contact Kansas City Investor Funding LLC at [email protected]. More information is also available on our Hard Money Loans FAQ page.

Happy Investing!

-JJ 

@Wardell Picquet hard money lenders almost always lend off of an LTV (loan to value) of the ARV (after repair value). This usually means you can wrap all of the fees, points, closing costs, etc., but any amount higher than the LTV threshold the lender has will mean the borrower needs to bring that difference to closing. Most hard money lenders are 65% - 70% LTV of the ARV.

@Gail Greenberg

1. Talk with your attorney and tax professional.

2. Talk with your attorney and tax professional.

Here's my opinion from personal experience from every angle here. Most hard money lenders (HML) use an after repair valuation (ARV). Doing so means there is rehab, obviously. Since there is rehab to improve the property to the ARV valuation the rehab funds must be readily available. Most, if not all, hard money lenders you come across will require the rehab funds to be escrowed at closing for future draw release since the loan is being made off the ARV. The reason for this is if the borrower defaults, or the contractor gets hit by a bus, there are still rehab funds available for completing the project.

For example, a $60,000 purchase and $40,000 rehab where the ARV is $140,000. . . If a borrower borrows the PP of $60,000 and plans to fund the $40,000, a HML is going to want the $40,000 brought to closing and escrowed --- really meaning the HML controls the release. If you have the ability to do so in your IRA then great. If not, it will probably be an issue.

And most HMLs require personal guarantees and recourse so you would want to be really careful and plan ahead in proceeding with this scenario. 

Good luck in your real estate endeavors!

@Nate Gifford welcome to the group! 

@Brandon Holley is right go to the local MAREI and or KCIG meetings. Great places to start your investing endeavors.

Good luck!