All Forum Posts by: Nicholas K.

Hey Nicholas,

Like others have said, every program can be a little different. If you're NOT making  downpayment, either the interest is very high OR it's a sketch a** loan. Expect 10-20% down on the flip side, and if you refinance it, expect 70-80% lTV.

Usually you'll have a flip loan to help renovate the property. They'll usually help with the purchase of the property and the rehab. Ask how their draw process works as most are a reimbursement and you'll have to upfront the money. Also ask what their draw fee's and turn around times are. 

I've worked with a Hard Money Lender (HML) for years now. if you have any questions, don't hesitate to PM me. Always happy to help in any way I can. I know HML can be confusing since they're not traditional in any sense.

Best, 

Wil Reichard 

It varies by lender but I'll give you ours as being typical...

You will be lent the lower of either 75% of LTV (as is value) or 90% of purchase. Since you are not experienced it might be 65% of LTV.

Rehab money is separate and funded at (usually) 100%. However it is paid in draws, in arrears, and held in escrow until each milestone is signed off.

This means you still need to fund (or find funding) for:

- the downpayment, whatever the HML does not cover of the purchase. Yes you need to put one down and yes you will have some skin in the game.

- closing costs including points,  fees of various descriptions, title costs, insurance, and appraisal...

- rehab costs, at least until the first milestone. 

- reserves for cost over-runs and unexpected emergencies

- servicing the loan until the property is stabilised or flipped or whatever, once again this might be longer than expected.

Best of luck with your future BRRRR empire!

@Nicholas K., depends on how long you intend to hold the property. The points are likely what's enabling the low interest rate. If you were to take a loan with 5% interest and 0 points, your break-even point is 5 years. So, if you intend to hold longer than that, it's probably a good ideal to pay the up-front points. 

*We're of course putting aside the time-value of the $2100 and any potential opportunity costs.*

Overall, this looks like a good deal. Good monthly cash flow and decent CoC ROI. I would recommend planning for some initial repairs. There's ALWAYS something.