How Can You Make ANY Profit Working With a Hard Money Lender?

I too would love to know the answer. Who has used a HML and pofitted from it? In my opinion it's a last resort option.

a HML and after you pay your fees and the loan money back you profit 5k-10k using OPM. If you can do 1 deal a month you made 25k-50k a year worst case that is still good extra money.

Now a lot of good investors using hard money are making 40k a deal.

Thats why some use hard money.

Get the house for 65k. It's worth 100k. Add in your loans of about $15k and your own profit of about 10% (10k) and you already have the price of the house up to $90k. With only 10% equity. No one will then buy it.

also sell to someone that wants to live in that house and they will pay more than an investor. Have you had a chance to see the 2010 Edge DVDs.

Steve

No I haven't. I bought the books and read them and just finished a couple days ago. Now I'm exploring my options. How much do the DVDs cost and where can I get them?

Also, selling the house at regular price is a good option, but very risky. If I can't sell the house within those 6-12 months then I lose it and it goes on my credit.

page you will see products by Dean there you will find the Edge DVDs Make sure you get the 2010 Edge event.

Also look up nstreet in the search at the top left. He has a lot of good information on HML.

I hope this helps.

Steve

Please consider the fact that a Hard Money Lender will not lend you any money if they see it's not feasible for that particular property you're applying for. Most of the time they will lend you money at 65% of the FMV. If they see that you cannot make money out of the property, they will not entertain you. In most cases, your application should always be accompanied by a Licensed contractor's estimate and it should match to the estimate done by there inspector.

I have a clossing this week that is financed by a HML and as a wholesaler, I don't have any problem with it for as long as the numbers makes sense to them. As a matter of fact, if possible, I would love all my buyers should use a HML or Private lender instead of Conventional loans. Hope this explains a little bit. I personaly have not used a HML because I only do wholesaling with "no money, no credit". Blessings to all. LA

Using hard money for residential properties is expensive. It is not practical unless your buying for very low ltv levels and the profit spread is so high that the costs really are minimal when you factor in the profit.

Hard money for apartment properties or commercial properties is where it would be practical.

I have never seen one hard money lender who advertises they fund residential properties actually fund a deal/

Most people that use hard money do the rehab and sell it to the end buyer. They buy distressed properties that the rehab brings out the value. If the house does not need rehab it will usually go to an end buyer to start with!
Hard money works great in certain instances where you will loose the deal otherwise. You must get the property cheap in the first place! Then the HML will only lend if the deal makes since and you submit a professional loan request. Also, you must already be under contract before a hard money guy will lend or process any paperwork!
If I am going to wholesale to another investor I assign the contract or double close. Why would you finance if you are selling to an investor?

Michael Mangham
MD Home Acquisitions LLC

The key is to make sure you calculate your fix up costs correctly and the amount of time it will take. Delays will cost you big time! And make sure to have a set schedule for your contractor. The 15-18% is PER YEAR, so if you can get a deal fixed and sold in 2 months time, you'll pay 1.25% per month, plus the amount of the points. The more costly the house, the more this adds up. And, if you're going to need to hold on to a property a year or longer, there's a better option.

Private money lending is the way to go if you have several properties you want to work on and want to save money and put some time in upfront, but if you have kids in tow, its pretty hard to get a PML.

Now, when I say PML, I mean relationship private money lending. They also lend to you based on the deal and you get people you know to tell everyone they know that you offer a nice rate of return on their money and then you set the limits. My website goes into a lot of detail. There's also another thread where I did a full detailed analysis comparison between hard money and PML. Here's the thread: http://www.deangraziosi.com/real-estate-forums/financing-and-credit/3627..., its post #27, but the whole thread will benefit you!

Sounds pretty steep, I'd look around for another lender.
Here are terms from a hard money lender in my area....
12.99% fixed interest rate, 55% ARV, Interest only installments, 3.5 - 5 points

Consider the following scenario to use this type of lender.....

$100,000 house in good condition, needs no work, seller has been transferred and can't afford double payments. Will sell the house for $70,000 but needs 40,000 now for moving expenses and a down payment in his new location.

Assuming the property will cash flow, get a $40,000 HML to get the seller his cash and have the seller carry $30,000 at favorable terms. (No payments for one year due to carrying cost of the HML for starters). Your cost for the HML is $1600 for 4 points and $433/mo for interest. Hold for one year and refi. (Better be sure you can refi)

Hard Money has it's place, although it may not be for every deal. It has it's good points, and they come at a price. It's another tool in your tool box and should be used judiciously.....after all, you wouldn't use a saw to tighten a bolt.