All Forum Posts by: Mark Safrin

Presuming that you have finished the rehab and have stabilized the property, if you are still unable to qualify for a conventional loan refi, consider a (still Hard Money) 30 year fixed, fully amortized loan. Should be able to get somewhere in the vicinity of 6%-8% plus around 2 points.

If you need someone to point you to such a loan provider and we are talking about a SFR (1-4 units), I'll be happy to point you to someone. ;)

PS. Just noticed that your sig seems to indicate that you are an Aussie. Do I have this right? Presumably you are investing in the USA.  If you are not a US citizen or Greencard holder then the above mentioned rates and other terms get more expensive but not impossible.

Best of luck in your endeavors.

Hard Money Loan Programs

We fund both Long-term 30 years fixed and Short-term bridge loans with 100% of Rehab for up to 36 months for Investment Real Estate Purchase and Refinance.

Asset Based - NO Tax returns and NO Income verification necessary.

A) Fix and Flip, Bridge and Rehab Loans

• Up to 90% of Purchase capped at 75% LTV for SFR up to 4 units
• Up to 75% of Purchase for Multi Family 5+
• Up to 65% of Commercial and Mixed-Use Properties
• Up to 100% of Rehab costs
• Typically 12-24 months
• No Pre-Payment Penalties
• Interest only rates between 9.5-10.89%
• Close in as little as 12 business days
• We allow a 2nd position
• Focusing on: NY NJ PA LA TX RI FL MD IL GA

B) Long term Purchase and Refinances of SFR up to 4 units

• 30 years fixed
• Up to 85% of Purchase capped at 80% LTV
• Up to 75% on cash out Refinances
• 3,2,1 Pre-Payment Penalty
• Start with 3-year interest only possible
• Fully amortized rates between 6.5-8.25%
• Close in as little as 12 business days
• All States

Broker Inquiries Welcome.

Call Benjamin Hurwitz (847)-915-1158

E: [email protected]

www.RealtyCapitalFinance.com

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 The trick with HMLs is not so much to find them (depending on the location and property type of course) but rather to find a property whose purchase and exit strategy makes sense to use HMLs. The numbers have to work. 

For a HML you will generally need between 10% to 35% down depending on things like credit and experience and HML loan type (presuming no seller financing or the like). You will also need very approximately around $8k in loan costs of one type or the other. You will also need money to carry the loan until you can exit via your exit strategy. If you are rehabbing then presuming the draws are in arrears at each milestone then you need money for at least the first rehab milestone. You should ALSO have extra money in case your rehab (if any) and exit strategy don't go as fast, as cheap or as optimistically as you estimated.

Yes your exit strategy can be to stabilize and then refinance to a conventional loan and begin your rental property empire. It can even be to refinance to a long term, fully amortized HML. If the numbers work.

 Most HMLs want you to have skin in the game. It's a matter of covering risk. 

Since you ask about 100% financing, the ones that I have heard of tend to a) be very expensive like 12-15% plus 5 points, so you already have paid a bit of downpayment whether you know it or not and b) the property goes to an LLC which you can get kicked out of the moment you miss payments - no foreclosure necessary and you lose sum rehab efforts you put in.

I recommend that if you use a HML (presumably because conventional financing, which is cheaper, doesn't work for you for some reason) that you go with ones that want you to have skin in the game to share their risk.

Best wishes in your endeavors. 

@Todd Fullerlove There are two types of HMLs that spring to mind that can be useful for rental properties. Of course like any HMLs they are more expensive than conventional loans, you have to have a good reason not to go with conventional.

a) Short term loan for purchase where rehab is required. These loans, usually for 12 months or so, tend to be interest only and no prepayment penalty. They are like a cold shower - you do what you need to do (purchase and/or rehab) and get out ASAP. 

b) Long term (like 30 years) HML loans. This is for stabilized properties with leases in place and no rehab required. These tend to be fixed and fully amortized with prepayment penalties and DTI requirements. Once again while cheaper than the short term HMLs they are still more expensive than Conventional.

Of course if the numbers work then b) can also be a refi exit strategy for a). I personally get a certain amount of satisfaction when a client finishes rehab and exits a 12 month bridge loan I lent straight to one of our 30 year refi loans. It shows we must be doing something right.

Were you after a HML that lend in Savannah or specifically HMLs that were physically located locally?

Cheers
Benjamin.

For HMLs you don't generally have to pre-qualify yourself. Of course it can never hurt to network to know what type of loans they offer. For instance it's good to know what their minimum loan amounts are, what credit score they can work with and the like. Almost all HML's for instance will not lend a mortgage which is less than $75K, for some its much higher.

Once you have a house either under contract or close to under contract you can then properly approach a HML. Most may want you to complete a loan application form. Once they have that they should be able to provide you with a loan terms sheet for your consideration. Make sure it also includes a list of fees and charges.

Remember if the HML is not charging, very approximately, somewhere in the realm of $8K in points and fees of various descriptions, its probably a good idea to ask what hasn't he told you. HMLoans are convenient and fast but not cheap.

A HML should be able to give you a rough estimate of the expected loan closing time. It is faster with those that have their own in-house appraisers or can work with a BPO. Some like us who are usually at the mercy of a third party appraisal company will likely be able to close in 2-3 weeks for a SFR (1-4 units). In my experience it is always a good idea allow more time for closing than less time, remember that when you negotiate with the seller.

It is always good to also have plan B. Just in case the mortgage does not go through for some reason or the other.

If you know other flippers who do more or less the same as what you are contemplating, it can never hurt to ask them for a recommendation on which HML they found to be good to work with.

Best of luck with your endeavors.

I would like to report that being a HML or at least a loan originator/closer for one is not that easy. You still have to be an entrepreneur, you still need to deal with clients in all their (Ahem!) temperamental glory and once its no longer your own money you are lending, your life is likely to be dictated to by underwriters, investors and lawyers in all their, (ahem!) temperamental glory.

Having said that, HMLing can be a rewarding business. Just today I wrote about someone with lots of cash to spare wanting to ease themselves into the HML game:

https://www.biggerpockets.com/forums/12/topics/741314-getting-into-hard-money-private-lending?page=1#p4362859

A HML that is willing to actually take a second lien position is extremely rare if their position is worth less than $1M. Even at $1M+  such a loan is extremely expensive - like starting in the realm of 15% interest only and ~5 points. The smallest second position HML I have ever seen is for $500K. If you don't operate in such amounts, this is basically not an option.

Some other HMLs such as ourselves are willing to allow a 2nd position meaning that we take first and the motivated seller or whoever takes second. We for instance merely charge an extra $1,500 in legal fees at closing due to the complexities involved.

A couple of other things that I note from your original post:

If your credit is poor then many HMLs will not be able to lend to you in the first place.

If you have no cash reserves at all, you face some major obstacles. Who is going to pay for the loan closing fees? Typically a HML will cost you extremely approximately $8K in points, fees and charges of various descriptions. Also what type of contingencies do you have in place for such possibilities as something major needing to be done (e.g. the HVAC dies or whatever)? How do you plan on carrying the loan(s) if a tenant or two leave while you stabilize again? Do you even have cash on hand to pay for the initial appraisal for a multifamily ~$650?

Just some thoughts. Wishing you the very best in your future rental empire.