All Forum Posts by: Sonya B.

Every lender has their own criteria and their terms will vary depending on the borrower's experience, capital contribution, credit, strength of the deal (how much equity is there), and other factors. Not all private loans require monthly payments. Some lenders may be comfortable funding the deal for a specific term that will allow the property to be rehabbed and sold before payments are required. It is possible to get a private loan without contributing any cash but those terms are not likely unless the borrower has a well established track record and the current deal is being purchased well below market value. The less experience you have, the more cash you will need to show or the stronger your deal will have to be to attract funding.

If you are applying for a loan that requires monthly payments you must budget for a loan large enough to allow you to complete the rehab and make the required payments. If you do not, the lender may foreclose on their loan and take possession of their (it was purchased with the lender's funds) property back.

Correct. The advantages of a HML is quick funding, not much in the way of required documents and no prepayment penalties. Any HML will require you to bring at least 10% down and the harder the loan the more down you will be required to bring. A lot of people use private money to obtain the down payment for HML's however.... A lot of HML's won't accept them and lend to you because they will have to take 2nd position and you, as the borrower, wouldn't have any skin in the game.

To make the payments you would need to have reserves in the bank and will more than likely have to show a POF to verify that. Something to keep in mind also is if you get a purchase and rehab loan you will be more than likely be required to front certain projects and be reimbursed on a draw process. Hope this helps some..

I am still fairly new so I am sure there is someone with a lot more experience.  Yes, you would be responsible for a monthly payment so having some method of paying it is needed.  You can not go in blind and need to have a plan on what funds you do need if the rehab takes longer than expected or the house doesn't move.  Hard Money loans can be a good finance option if used correctly, but not very often will you find a deal where you can use a hard money loan to make a purchase, rehab, and flip with no out of pocket expense.