CL JonesHard money lenders are almost like banks as far as making you jump through hoops to get a loan. Most require that youi have at least a 680 credit score. They want you to show financials for the last two years (tax forms, bank accounts, ira, company setup, etc.)
If you are investing in the state that you reside, you still have to put up a 5% contingency fee just in case you make an error in your repair calculations. Unfortunately, that’s not the end of it. Most HML’s will still charge you 14.99 percent interest, along with 3-5 points.
Yea, if you are like me, you will agree that this system is ridiculous and flawed. It still gets worse. If you want to do a deal outside of the home state, the HML wants you to put an extra 5-10% down (in escrow) to do business with them.
Do you see why most investors don’t jump on the hard money band wagon? HML’s have some of the most expensive money in the industry. They are quick to tell you it’s not the price of the money, but the availability of it that is important.
I’ll leave it up to you to decide. I must admit that I have Hard Money, as well as private money in my life. I will explain Private money next time around.
PS. I will update this site at least every Monday, Wednesday, and Friday. So make sure you check back on a regular basis
CL Jones
I,M LOOKING TO CASH OUT REFI BPT. 3FAMILY.PUCHASED 3 MONTHS AGO FOR 185K.TOTAL INVESTMENT WITH REPAIRS 250K.RECENT APPRAISAL 315K.INCOME $3175 MONTH,TAXES $6738 INSURANCE $1847.MY CREDIT SCORES ARE 760.I NEED HELP BANKS WON’T LEND FOR 6 MONTHES.203-257-6581
Hard money, in some cases does make sense. If you are using it as short term money to flip houses it can be beneficial. First and foremost in this scenarios though is you have to have a good exit strategy for the house you are reselling. I have seen many investors take out a hard money loan, but then they were unable to sell their flip in a timely basis. This resulted in the HM lender taking over their investment flip.
I don’t think you’re entirely correct with your assertions. The term “hard money” refers to the fact that hard money loans are collateral-based — i.e., hard assets back the loans. There may indeed be some hard money firms that emphasize credit scores, etc., but the general principle of hard money lending is that it’s based on the value of the collateral, and on LTVs that ensure protective equity for the lender — so that credit score, etc ., is a lot less important.