All Forum Posts by: Kerry Boyle

@Michelle B. So from my perspective as a HML that does both cash-outs and purchases:

Why don't you just get a lender now to fund the purchase? Are you rehabbing the property at all? Plan to flip or hold? Closings with HML can happen in as little as two days (it isn't easy but it is possible).

The reason I say this is, cash-out refinances tend to be a bit more expensive than money towards a flip/rehab. There is more risk to the lender on a cash-out (particularly when lending out on the ARV).

@Jacob Szeto 

Sounds like this isn't really your lender's type of loan. Have you talked to other lenders?

Tough position! If the lender's can't back you as an individual they need to back either your assets or your deal.

In my experience, there are 2 angles: Deal, Borrower.

Deal: Property, value add, location, etc...

Borrower: Credit history, experience, assets.

If you don't have experience, assets, or credit history - your deal better be really good! If you have assets and experience, credit history will mean less. If you have assets and credit history, your experience means less and if you have experience and credit history your assets may mean less.

I would recommend using compensating factors (i.e. Look at all the money/experience we have) or finding a deal, vetting it with your lender, then get a POF letter for your realtor to show you the house. Or find another realtor.

@Larry Turowski gave a good answer.

Think of things this way: Typically when speaking to lenders, the less that is required the more expensive the loan. If you have a good credit history take advantage of that, if you have amazing W2 income - use it. 

Also look at it this way - if your DTI is terrible, be sure to have a lender that doesn't look at DTI. Shoot me questions anytime!

If I am answering this question only:

Is there a way to structure this to be desirable to hard money/private money lenders?

Then as long as you meet our requirements we would fund the loan, we don't only do fix and flips so we may be different than local HMLs - but we are short term 6-24 months. Our main interest, in this scenario, is what is your exit strategy from our loan? 

I think you may be able to find a private rental loan that meets what you are trying to accomplish.

**Edit: Sorry I missed the section where you don't have a large down payment. In almost everything I know, you have to have at least 10% (usually more like 25-30%) to put down.

I am not clear on what you are asking on any of the questions above.

Interesting. I would want to know what does he gain from using a land trust vs an LLC? Protection from the lender?

I just ran across a lender that uses land trusts exclusively where the lender and borrower are both interested parties, but the borrower loses interest if the mortgage payment is delinquent 60 days. I doubt this would hold up in NJ courts, but the lender seems successful.

I don't know how this works in NJ, but as you know NJ is one of the two worst foreclosure states, so I would be cautious around what he wants in terms of protection. 

I would agree with David, get a pre-approval from the HML before finding the property.

You should have your own title company that you build a relationship with and (hopefully) can get preferred rates. You can ask them details on EMD. Ideally, they should hold for you. Title should be started as soon as contract it seller signed.

POST CLOSE

- Get first installment from HML to pay licensed contractors and then other installments as work is conducted. Some lenders pay this at closing.

POST REHAB

- Once traditional financing is approved (assume 2 months) pay-off hard money lender. Since appraisal is now higher receive a large bulk of initial cash invested back. Be sure to consider seasoning requirements that your traditional mortgage company may require for cash-out and rate/term refinances. Best advice is get a pre-approval from LT financing company as well and provide it to your HML as a viable exit-strategy. Definitely request the lender's seasoning requirements.

Best of luck! New Jersey is a great place for cash-flowing properties!

As a HML, this is the best scenario. Something like this makes a deal a MUCH easier decision.

Is it typical for a new BRRRR investor to expect the following from hard money loan/investor:

For the hard money loan to pay for:

a down payment - A hard money loan will pay part of the purchase price, typically 65-90% of the purchase price.

closing costs - Some loans may include closing costs, this is atypical.

repairs on the house -  Most hard money loans to include part or nearly all of the repair budget.

As for HML working with first-timers, I don't think what Jaysen said is the standard. HML will finance your deal and confirm it makes sense, but it may be at a much higher cost than someone with experience. if you are getting rejections it is because your deal, credit history, or assets are not sufficient for the lender.

As for getting your ducks in a row, talk to your hard money lender as well, there are longer terms, extensions, or 'take-out' lenders that they can refer you to that may not have seasoning requirements as long as 1-year.

Feel free to connect with any more questions!