Hard Money is the way to go

I know you just did your first deal with a HML. How long is your HM loan good for? When do you have to convert it to a traditional loan. I have good credit, but my debt/ratio is not so good. Will you be able to refinance your deal into a traditional loan based on the cashflow of the property, or will the bank be looking at your credit and debt/ratio? I'm curious because I'm going to try your strategy. My concern is getting the tradtional loan.

KimmyJ

How exactly can you get in with hard money loan if you plan on renting it out??? how can you repay the loan back after there time limit is up???Whether it is a 3 month loan, or a year loan that the hard money give out...How does the refinancing actually work when you get in on a hard money loan?

My guess is he is using the HML to aquire the property. Then refi with a traditional loan. It is easier to get a traditional loan once you own the property as aposed to buying it.

Hi Everyone.

I am looking for some help with recommendations for real HM Lenders. I have called many from the list provided on Dean's site but they ask for personal tax returns, lists of assets etc. My understanding is that the HM loan is based on property deal, but it seems that they are asking for more documentation than traditional banks along with personal guarantees. I have created new LLC for real estate business and would therefore like to limit personal exposure.

Any suggestions? Thanks in advance.

BC hit the nail on the head.......Hard Money is used to AQUIRE PROPERTY.......One thing you would prefer is a Hard Money lender that has a MINIMUM seasoning period.....3 - 6 months preferably. Because it's higher interest, you want to get out of that asap. Also, IT is INDEED easier to get a conventional REFI than a NEW loan on a property. Not only that they ask for LESS personal info......and really not more property info, just different. With one lender I am trying they don't need an Appraisal. Just a good set of Comps, and personal info like credit report to get set up initially with them. AFTER the first deal.....they don't require any more of the personal info...just the property. So to me it's EASIER with Hard Money

makes total sense...thanks...I wasn't to sure bout how to get in using hard money lender, then refi it...thanks

I have tried to look for HMLs lately but all I have found are lenders that do 1 day loans for double closings. Since i don't have a buyers' list yet, they don't really help me as much right now. Not to mention that I would like to hold some properties to start. Any advice?

Stephen

Yes, u can buy the properties on an "owner financing"... "lease or lease opt" ... "subject to"... "rent to own".... "locate a credit/cash partner"... "private money lender".... So, u were saying, a "buyers' list.... U don't really need one??????????????

Anyone know of any good HMLs for residential property in NY - looking to buy and flip or hold and refinance later on? Like BostonDolfan, I have found lenders for double closings but still looking for HMLs for longer period that do not require crazy docs such as your own list of assets to qualify as should be based on deal.

Thanks in advance for any help or suggestions.

Try looking at Reiclub.com. It has a slew of HMLs that might meet your criteria.

Neil

Have you been able to negotiate with the HMLs or do they set the terms? (Want to learn about them through you, if you don't mind. I've been leery of using them.)

Thanks,

Rina

Rina:
check out coastal funding. They "flash fund" and their rates are great and do funding in every state.

http://www.coastal-funding.com/faqs.html.

I found out about them from some other Deanie.

Caveat to other Deanies: When using HMLs, make sure you know for sure what your interest rate is going to be - depends on the size of the loan.

Happy funding!
Jenny

Yes, Coastal is a great resource. We were all pretty impressed when Sissy first posted them on the site. Have you had any experience using their services? I haven't seen any posts yet from anyone who's followed through. Would be nice to hear.

Also, I looked into a couple of the websites Sam gave links for (a little longer-term HMLs). For what I do (buy, fix, & hold), they seem like they may be useful initially. But with the lenders getting so strict on refis, I have been hesitant to use HMLs with the exorbitant interest rates they demand. I, of course, am not a big risk taker (a plus & a minus. lol), so I will be watching in positive anticipation to see how this works out for others.

Thanks again,

Rina

You've definitely got the drive and the spirit. Thanks for all your posts on the great deals. It's fun to watch awesome deals play out. DEFINITELY puts a boost in everyone's REI spirit!

Thanks again and keep it up!!

Rina

I gotta tell you....I am just a newbie, and that is probably why I am jumping headlong into this.......I don't know any better. I think to a certain extent It should be easier to REFI homes with Monster equity seeing as we are approaching the bottom of the market. I don't think the banks need fear that the equity value buffer that they like to depend on will disappear like it has for the last couple years. Hopefully we can all continue to give each other ideas that open up our eyes to new opportunities and ways to conventionally and creatively finance our ways toward financial freedom.

Thanks Rina for the kind words.....I hope to be in the "inner circle" club someday soon.

I am new to this site but have been investing full time for awhile and understand the challenges of refinancing investment property for long term hold.

Firstly, Hard Money Lenders can be very useful under the right circumstances. As long as you realize their terms are short (6-12 months in most cases) and there is a plan for paying them off. One HML where I live has been taking back so many properties he has temporarily ceased his lending.

As for refinancing. We are finding the local banks, not the larger institutions, to be more willing to lend. Each local bank has it's own underwriting guidelines and can pick and choose who they work with. You are at an advantage if you already have a deposit relationship. If not, they will want you to move your accounts. Ask for a commercial loan officer and just tell them what you are doing.

They do tend to scrutinize the borrower more than the HMLs, but if you have decent credit and are not asking for more than 70%-75% LTV then your chances are pretty good. If it is a rental property, they are going to want to see about a 1.25 debt coverage ratio just to make sure the property cashflows. They are also going to want to see some cash reserves in the bank showing your ability to make the payment even if your tenant doesn't.

If you have other income, like a real job, that helps too. They look at us very hard because we are full time investors and have no other income aside from our investment properties.

Get determined. Call every bank in town. Don't take no for an answer. After all, if you don't ask, the answer is always NO.

Hope this helps.

CTP

Hey....thanks for the input....I love to hear from professionals with experience that allow me to add to the BIG picture that I have in my mind about how to approach this business.

In the case of www.privatemoneysource.com they are giving me a 2 year loan on my first house......and in lieu of cash...they are allowing a small lien against my personal residence to give the HML the feel of me having "skin in the game"

Basically my lender told me that once we do a "few" deals.....no SKIN will be needed, and that the lenders will come looking form ME....

That sounds good to me.....

That sounds great. Just a little friendly advice. After you do a couple of deals with these guys have them shift the "skin" off of your personal residence to one or more of the other properties (have them spread it out if they need to) It's called "substituting collateral". You don't want to put the roof over your head in jeopardy for ANY investment property. Just my opinion.

CTP

Yes, but the best part is that after a few deals my lender says that they won't require ANY collateral. Once they believe in you and your record of successfully paying back the loans...the HML's will line up to give you their money.

These guys only have a 3 month seasoning period as well so I don't have to keep the loan long if I don't want to.

I met a guy recently that uses HML's all the time.....he has 150 properties he has purchased over 30 years.

Hi, northwest! This investor uses HML to acquire the properties and refi later right? I talked with my loan officer yesterday to try to find more about this. He said all that he can do now is after(all the properties have to) six months to one year seasoning he can find rate of conventional loan +1.5 for 30 years fixed. That is under current market situation, again it is hard to predict what will be in six month to one year. Anyone has any information of finding refi loans that don't require seasoning?

Thanks again for the people that post here I learned a lot today, again!

Every HML is different....mine only requires 3 months seasoning prior to refi,,,there are SO many lenders out there and I am sure that you can find one that will work in less time. This is especially true if you buy a home with a history of rental occupancy and Cashflow. Don't stop with just your local friendly motrgage broker....There are many out there.

Go for it....don't hesitate....The time you waste may just cost you THOUSANDS.

Sam, just curious, but what do you mean by this?
The HML requires you to keep the loan with them for at least three months before refinancing?... The refi lender you'll be using only requires 3-month seasoning?...

just a little confused with the wording. sorry.

Thanks,

Rina

Hey Rina........The HML I am using on my first house only requires that I make 3 interest payments ie...3 months in order to fulfill my requirements with them. At that point I may refi. At least that's what I meant...hope that clarifies it. I was trying to say that even though their mortgage broker is saying 6 - 12 months on seasoning Prior to refi-ing....there may be some others out there that will not require the same time frames.

Thanks
Sam

As far as the refi, Winny's refi lender wants the property to be held at least six months before they will consider refinancing the property, so it would probably need to be covered with the HML for the 6 months. But, like you said, there might be other ways around that if you find the right lender. Any luck in that area?

Thanks for the clarification.

Rina

There are HMLs out there that have no minimum holding requirements. Most are charging anywhere from 4-6 points anyway which they receive regardless of the length of time the note is held. In fact, they welcome a payoff instead of running the risk of default and having to take the property back.

As far as refinancing, many commercial and/or portfolio lenders do not have seasoning requirements before they can facilitate a refi. As long as the title is clear, the property appraises, there is cashflow, the LTV is 70%-75%, and the borrower looks pretty good, they are OK.

You just have to call around to as many lenders as possible to get the answer you want, which is YES! When you do call, though, my suggestion would be not to get too carried away and tell them you want to do 50 properties a year - that might scare them. Start off small and say you would like to start with a couple of properties just to get a feel for their program and give them a chance to see how you repay.

Keep in mind, I'm talking about going directly to the local banks, not a broker. Nothing against brokers, I have a couple myself, but most lenders that brokers have access to are providing conforming loan products which may mean seasoning etc.

Also, you may want to try your local Credit Union(s) as well. The joining fees are generally low and you don't have to work for the government or a certain company to join, contrary to what most people think.

CTP

Thank CTP for the great additional info....I love to hear experience seeping through the text you are adding. It's obvious that you have been around the block......You have inspired me to speak to MY credit union as well as some of the smaller local banks.

....Remember people.....BUILD RELATIONSHIPS....not only with people, but with every positive additional "tool" ie...HML's, Banks, Title companies, Brokers....anyone and any entity that can affect your business...hopefully in the most Positive ways.