Borrower Types: The Professional - HM Lender will cut sweet-heart deals to keep these borrowers around Experienced real estate investors Regularly engage in property transactions Typically have a track record of successful projects The Newbie - Charge Higher everything as the risk is higher as no experience Novice investors or first-time borrowers Limited experience in real estate Seeking to build their investment portfolio The Deadbeat - Only lend if the deal is so SWEET, they can't lose if they take the property from the Borrower Borrowers with poor credit history or financial difficulties High-risk borrowers May struggle to secure traditional financingThe lender will do an application on the deal/borrower and some standard docs they require are:Hard Money Application / ExperiencePurchase contractARV report – COMPS – See * Redfin*Pictures of Property – most people use Dropbox to shareProof of Funds – Down / Reserves (Bank Statements)Personal identification (ID or passport)But usually if the deal is sweet enough, they will do it anyway because if the deal goes south, there is so much equity/value in the property that the HM lender can't lose.

We have a local who started as a delivery driver.

Not always true, however typically HELOCs will go to a max loan to value ratio of 85, sometimes 90%.

How is this typically handled? 

Typically we talk about cure notices for tenants, but they do go both ways for breach of contract.

Essentially, you have to spend your own money and complete work on the property prior to reimbursing yourself out of the escrowed rehab budget.The draw process typically takes 5-7 days from initial request, to scheduling an inspection, and finally for the lender to wire those funds to you after your work is confirmed by the inspector.

Similarly, the markets with the best initial cash flow typically have poor historical appreciation and rent growth.

Collections agencies typically take 30-50% of what they collect. 50-70% of something is better then 100% of nothing IMO.  

To answer your first question, since we warranty the purchase price less payments received, our performance warranty is only applicable until an investor's investment principle is no longer at risk (which is typically for the first 4 to 7 years from when they purchased a re-performing note).

Always look for strong economic drivers like population growth and job market growth.