hard money. should really be called expensive money. or, convenient money. we recently started working with a hard money lender because we buy houses in need of major repair and cannot always finance with cash. the banks we've dealt with wouldn't finance until we had done the improvements.
hard money lenders all work pretty much the same,I think. they will loan you up to 90%LTV at a rate of around 12 to 14% for one year. often there are points paid (up front) in our case we pay 3 points. the mortgage is interest only. if you plan to hold the property for a rental or what-have-you, you would need to refinance before the year was up.
as i said, it's expensive but it so much quicker getting in that it more than pays for itself if you rehab.
hard money lenders seem to be popping out of the woodwork (which is good) do a search for them on your browser and see what I mean.
with that said, I would love to hear other peoples thoughts,anecdotes,warnings and horror stories on this subject.
i believe some will check your credit but from what I've read at their online sites they are more lenient. i think they are looking for guaranted value on the property. so it's safe and they win either way.again, i know how it's working for us and your mileage may vary, but check their websites,they are usually pretty specific about their terms. some,i've noticed, will offer a higher LTV after you've worked with them a time or two.
They are certainly more lenient but at a cost of course. You can go out and try to find your own investors, promising 10% return on money should attract some people guaranteed against property.
HML's generally lend at about 65% LTV (based on their valuation). Banks lend off the LESSER of the appraised value or the purchase price. HML's DO NOT. They will choose a value and give you about 65% of it. so if the property costs 70%, then you need 5% down payment. If it costs 60%, then you could end up with 5% for repairs.
The bottom line is that HML's like you to pay, but if they don't they make money on forclosing on, owning, and then selling your property.
For most people in this game, the most difficult aspect of REI is finding properties. Many HML's started out as RE investors.
Whether you pay them or not, they're going to make money (something that banks generally can't say)
I am a loan officer and hard money loans are my specialty. I can loan 75% LTV. The only paperwork required is a 1003 (credit app) and an appraisal. No credit checks, no qualifying, etc. The interest rate is 11% and 4 points. Not cheap, but definitely not the most expensive money out there. I recently put together a deal in two weeks on a 29 unit apartment building located in another state. I used a hard money lender and got it closed within those two weeks.
Hard money lenders have their place....just make sure you have a good exit strategy in place before you use hard money. It's easy to get but meant only for the short term. :-D
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hard money. should really be called expensive money. or, convenient money. we recently started working with a hard money lender because we buy houses in need of major repair and cannot always finance with cash. the banks we've dealt with wouldn't finance until we had done the improvements.
hard money lenders all work pretty much the same,I think. they will loan you up to 90%LTV at a rate of around 12 to 14% for one year. often there are points paid (up front) in our case we pay 3 points. the mortgage is interest only. if you plan to hold the property for a rental or what-have-you, you would need to refinance before the year was up.
as i said, it's expensive but it so much quicker getting in that it more than pays for itself if you rehab.
hard money lenders seem to be popping out of the woodwork (which is good) do a search for them on your browser and see what I mean.
with that said, I would love to hear other peoples thoughts,anecdotes,warnings and horror stories on this subject.
how do they check credit? are they just like any other lender? are they more lenient?
i believe some will check your credit but from what I've read at their online sites they are more lenient. i think they are looking for guaranted value on the property. so it's safe and they win either way.again, i know how it's working for us and your mileage may vary, but check their websites,they are usually pretty specific about their terms. some,i've noticed, will offer a higher LTV after you've worked with them a time or two.
They are certainly more lenient but at a cost of course. You can go out and try to find your own investors, promising 10% return on money should attract some people guaranteed against property.
Wendy, hello fellow southwest Floridian!
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Hard money lenders only work with a down payment though, correct?
90% LTV, for instance, applies to the price I would pay as the buyer?
HML's generally lend at about 65% LTV (based on their valuation). Banks lend off the LESSER of the appraised value or the purchase price. HML's DO NOT. They will choose a value and give you about 65% of it. so if the property costs 70%, then you need 5% down payment. If it costs 60%, then you could end up with 5% for repairs.
The bottom line is that HML's like you to pay, but if they don't they make money on forclosing on, owning, and then selling your property.
For most people in this game, the most difficult aspect of REI is finding properties. Many HML's started out as RE investors.
Whether you pay them or not, they're going to make money (something that banks generally can't say)
I am a loan officer and hard money loans are my specialty. I can loan 75% LTV. The only paperwork required is a 1003 (credit app) and an appraisal. No credit checks, no qualifying, etc. The interest rate is 11% and 4 points. Not cheap, but definitely not the most expensive money out there. I recently put together a deal in two weeks on a 29 unit apartment building located in another state. I used a hard money lender and got it closed within those two weeks.
Hard money lenders have their place....just make sure you have a good exit strategy in place before you use hard money. It's easy to get but meant only for the short term. :-D
[addsig]