Posted by chris on June 11, 2005 at 08:03:24:
Oh,
I didnt get that from the original post, I was mostly replying to you :). OK, well ifthe property has already been rehabbed then what is the current value? How much equity is in it? etc…
For the 1 millioneth time … - Posted by therealestatelady
Posted by therealestatelady on June 09, 2005 at 19:55:47:
Please tell me where and how can I find a hard money lender and once you find one can you use that same one deal after deal. I quess what I am saying is… we are going to start investing this month and I want to start off buying rehabbed properties at a low cost and rent the property out, however credit and not a lot of money to put down. What is the best way to make 5 thousand dollars work for me as a baby investor?
Re: For the 1 millioneth time … - Posted by Mike (Seattle WA)
Posted by Mike (Seattle WA) on June 10, 2005 at 16:51:05:
As others have said, Hard Money is not for buying rehabbed properties. It’s a stop-gap solution for buying rock bottom priced houses quickly until you can (very) quickly sell or refinance. Even here in Wa, 12-15%, 4-6pts will absolutely kill you on just about any average deal. You’re paying 2-3 times standard interest plus 3x4 times standard loan costs. Ouch. Pretend you got a house at 80% ARV (not gonna happen after rehabing) with a 12% 4pt loan and hold it for 3 months while doing cosmetic work to sell. You’re paying 3% of the loan value in interest plus 4% in costs plus another 10% or so in selling costs (with an agent) and you are sitting at 3% left for profit. That is thin. I’m not gonna work my rear off for 3 months on a say 250K house for 7,500 dollars. The same house as a rental would need (if aquired at 200K - 80%) rent of about $2400 a month to break even. That house here would at best fetch $1100 a month.
This is where we’re coming from in regards to hard money.
Now, 5K for a baby investor? That’ll pay for some good advertising. Find a house, get it under contract, assign it for a few K, a repeat. This is where you make your money until you have a fairly large reserve to work with.
Re: For the 1 millioneth time … - Posted by Dee78
Posted by Dee78 on June 10, 2005 at 12:26:19:
As a rule of thumb, most investors don’t let the repair and purchase price exceed 65% - 75% (and recently 80%) of what the property will be worth once in repaired. In my experience, I find deals and still make profits with 75% ARV. Unless you’re really seasoned, finding deals that don’t exceed 50% in value may prove to be tough and you may miss some deals trying to stay within those numbers.
Re: For the 1 millioneth time … - Posted by Mark
Posted by Mark on June 10, 2005 at 06:31:50:
Be sure that your purchase price including repairs is no higher than 50-55% LTV or your in for a world of pain.
Just based on my experiences
Good luck
Mark
Re: For the 1 millioneth time … - Posted by Dave T
Posted by Dave T on June 09, 2005 at 23:16:35:
If everything I have read about Hard Money Lenders is accurate, you can’t afford them for property you intend to hold.
The upfront points will be expensive, the interest rate will be prohibitively high, and the amount of the loan will likely be insufficient to purchase the property at retail.
Hard Money is Short term - Posted by chris
Posted by chris on June 10, 2005 at 02:23:44:
If you intend to rent it out, you would get the hard money to acquire the propery and get the rehab done. then you would refinance with a convetional loan to extract your equity and get better loan terms(long-term)
Never hold a property with hard money longer than is needed to get the rehab done.
chris
Re: Hard Money is Short term - Posted by Lloyd Cobbs
Posted by Lloyd Cobbs on January 29, 2006 at 20:15:12:
Brought a 23 units apartment building on a land contract for 400,000 and building appraised for 450,000. Looking for a short term refinance loan so I can take out a first and make improvement on the building
Re: Hard Money is Short term - Posted by Dave T
Posted by Dave T on June 10, 2005 at 09:23:32:
Chris,
According to the original post, it sounded like the property was already rehabbed. If this buyer needs to resort to a hard money lender for a retail purchase, I assume that traditional lending sources won’t make the loan.