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Hard Money Loans

 
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Old 10-07-2018, 08:49 AM   #1
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Hard Money Loans


Seeking advice on hard money loans for flipping houses. Advantages or disadvantages?
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Old 10-07-2018, 08:50 AM   #2
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Re: Hard Money Loans


You better flip fast or you will be working for free.

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Old 10-07-2018, 09:16 AM   #3
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Re: Hard Money Loans


The lender is the one who makes money. I see most flippers lose out unless they can finance themselves.
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Old 10-07-2018, 09:21 AM   #4
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Re: Hard Money Loans


The only lender here that will give you money for a flip is one that will want 20% interest in a year and there is a very large penalty for being late. Your life.

That is a gigantic risk for any lender, it's not 2007 any more.
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Old 10-07-2018, 09:55 AM   #5
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Re: Hard Money Loans


No advantages.
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Old 10-07-2018, 10:20 AM   #6
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Re: Hard Money Loans


Quote:
Originally Posted by rrk View Post
The only lender here that will give you money for a flip is one that will want 20% interest in a year and there is a very large penalty for being late. Your life.

That is a gigantic risk for any lender, it's not 2007 any more.
Wow. I'd be half a point over prime with my local bank. Only a dumb ass would pay even a few points over prime. 20% he's missing some chromosomes. If your credit isn't good enough don't do flips...

Weve kept all deals I've found and rented them out. Not any deals now.

BUT if there is rent Works well. When I have sold later they are generally appreciated lot more than if I'd of put in stocks. But you gotta pay back depreciation
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Old 10-07-2018, 11:18 AM   #7
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Re: Hard Money Loans


My newest project, the 20 spec build, is about to take off with a .5 over prime loan.

Kind of funny, I mentioned to my realtor about pre-selling, and she told a friend who told a friend, and I had 2 pretty solid offers for hard money loans.....problem to me is the 8% they wanted.

It has an advantage, you go bust, you lose only the secured property, but if you go broke with a bank, they go after it all unless you are LLCd and then they still go after you.

If you have solid credit, and a solid plan, a bank will finance you.
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Old 10-07-2018, 01:01 PM   #8
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Re: Hard Money Loans


without stellar credit you will pay a premium to borrow funds.

flipping is a dangerous game.

buy for pennies on the dollar and sell at high end....

but if you are in a hot enough market to flip unlikely you will be able to buy low.

without self finance, quick turn around & a hot market you will likely make more money flipping burgers at a fast food joint....
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Old 10-07-2018, 01:10 PM   #9
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Re: Hard Money Loans


The only fliper I ever saw succeed was a guy who carefully bought only repossessed homes that needed very minor repairs and a coat of paint. And he made 25% or more....but if he got into it and spent any real money, then he rented them out to recover. He had a plan for both cases.
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Old 10-07-2018, 01:48 PM   #10
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Re: Hard Money Loans


Quote:
Originally Posted by dhimprove View Post
Seeking advice on hard money loans for flipping houses. Advantages or disadvantages?
It depends on your experience...

If you have excess capital to be able to self-fund a flip that is the ideal way to approach it, as the money you would have paid for origination and carrying costs increase your ROI, and removes a lot of risk (not to mention potentially reduces your capital gains through tax strategy)...

That said, if you don't have the capital to self-fund but have an opportunity for revenue to extract from a flip, and traditional financing is not available to you, hard money is generally a short-term expense and part of the CODB... no different than other costs if you want the revenue to be generated... keep in mind it's the revenue you're after... if the origination and carrying costs, along with your other costs, are within the margins you need, the deal still makes sense to extract the revenue from the property... if hard money is the only way to extract that revenue, as opposed to leaving it on the table for someone else, well, you need to make that judgement call...

Hard money loans don't typically report to your credit, and are usually setup with the deal as the qualifier... if you need to do hard money, remember that after the first two successful flips with the same company, the terms should start getting better (i.e. - lower interest/origination fees)...

With all that in mind, the ideal way is to work it to the point where you self-fund, but it takes time... I'm definitely in the camp of keeping the money in your pocket as opposed to giving it to the bank...

If you were talking about buy-and-hold (i.e. - renting), which is doesn't seem to be the case here, a formula of flip-flip-hold to be able to buy the rental with cash, will get you to a larger ROI quicker... no sense giving the bank the money when you don't have to...


Something else to consider... traditional banks are more than happy to lend when you don't need the money... sock away the revenue from your first couple of flips, and a LOC will easily open up to you...




EDIT: FYI... you might benefit from visiting the following sites...


www.reiclub.com
www.biggerpockets.com
www.creonline.com/

Last edited by KAP; 10-07-2018 at 02:18 PM.
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Old 10-07-2018, 06:22 PM   #11
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Re: Hard Money Loans


Every successful flipper that I know always buys their properties with cash... they make good money doing it however they also flip the homes like a well oiled machine but it is a lot easier doing that when you have cash on hand


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Old 10-07-2018, 08:55 PM   #12
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Re: Hard Money Loans


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Originally Posted by Windycity View Post
Every successful flipper that I know always buys their properties with cash... they make good money doing it however they also flip the homes like a well oiled machine but it is a lot easier doing that when you have cash on hand


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Cash is king in the flipping world

I have seen lots of flips go wrong though, not easy to do here now unless labor is very very cheap and so is material. Appraisals for next buyer are wise to the cheap flips.
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Old 10-07-2018, 09:02 PM   #13
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Re: Hard Money Loans


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Cash is king in the flipping world



I have seen lots of flips go wrong though, not easy to do here now unless labor is very very cheap and so is material. Appraisals for next buyer are wise to the cheap flips.


Yea that why the successful ones are seasoned veterans that know what their doing and have good crews of subs that work efficiently and cheap

One guy I know probably does about 20 flips a year buying dilapidated homes for cheap. But the inventory is drying up now because the housing market has been so strong for a couple years. There is hardly any foreclosures or vacant homes left anymore. So it’s getting harder to make big money on flips since he can’t pick up properties as cheap


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Old 10-07-2018, 09:03 PM   #14
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Re: Hard Money Loans


prices are dropping in many markets. interest rates are up. The big returns diminished long ago. New developments with empty lots abound....at least around here
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Old 10-08-2018, 06:34 AM   #15
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Re: Hard Money Loans


I agree with post #10 above.

Furthermore, I would suggest trying to borrow "medium hard" money from some people that may have cash invested in investments that produce a low rate of return. For example, doctors, lawyers, businessmen/women, etc. Also, look to people who own their primary residence outright, since they can typically get a HELOC on that home for prime minus 1/2% or so. If they can borrow at 4% and lend at 12% - 15%, many of them would jump at the chance. Also look for people who might have Whole Life insurance policies, since they can borrow the cash values outhat of those policies for a very low interest rate.

I lend to flippers/investors. My rate now is 12% (payable as 1% per month interest only) but that will have to go up shortly, since the Fed has been raising rates, so my cost of funds has been creeping up. Also, my maximum term is 1 year.

I ONLY lend when I am in first position. I lend the purchase price, and, for an experienced flipper/investor, will also lend some or all of the estimated rehab costs. Typically, these flippers are buying properties at a discount, so, worst case, is that I take ownership of the house. We use standard Fannie Mae Mortgage document, and Fannie Mae Balloon Note document, along with a Deed in Lieu of Foreclosure, and a Personal Guarantee. The mortgage and note docs are freely available at the Fannie Mae website. The others you can find online.

If the flipper/investor knows what they are doing, this can be a win-win.



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Old 10-17-2018, 05:00 PM   #16
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Re: Hard Money Loans


Old Shakespeare had it nailed many moons ago !

This is a famous phrase said by Polonius in Act-I, Scene-III of William Shakespeare's play, Hamlet. The character Polonius counsels his son Laertes before he embarks on his visit to Paris. He says, “Neither a borrower nor a lender be; / For loan oft loses both itself and friend.”
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Old 10-17-2018, 05:21 PM   #17
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Re: Hard Money Loans


Quote:
Originally Posted by fjn View Post
Old Shakespeare had it nailed many moons ago !



This is a famous phrase said by Polonius in Act-I, Scene-III of William Shakespeare's play, Hamlet. The character Polonius counsels his son Laertes before he embarks on his visit to Paris. He says, “Neither a borrower nor a lender be; / For loan oft loses both itself and friend.”


That is only a tidbit of one of the greatest scenes of all time.


Yet here, Laertes? Aboard, aboard, for shame!
The wind sits in the shoulder of your sail
And you are stayed for. There, my blessing with thee.

And these few precepts in thy memory

Look thou character. Give thy thoughts no tongue,
Nor any unproportioned thought his act.

Be thou familiar but by no means vulgar.

Those friends thou hast, and their adoption tried,
Grapple them unto thy soul with hoops of steel,
But do not dull thy palm with entertainment

Of each new-hatched, unfledged comrade. Beware
Of entrance to a quarrel, but being in,
Bear ’t that th' opposèd may beware of thee.


Give every man thy ear but few thy voice.


Take each man’s censure but reserve thy judgment.


Costly thy habit as thy purse can buy,
But not expressed in fancy—rich, not gaudy,
For the apparel oft proclaims the man,
And they in France of the best rank and station
Are of a most select and generous chief in that.


Neither a borrower nor a lender be,
For loan oft loses both itself and friend,
And borrowing dulls the edge of husbandry.

********
This above all: to thine own self be true,
And it must follow, as the night the day,
********

Thou canst not then be false to any man.
Farewell. My blessing season this in thee.



((((Sorry....
I just love that.
Always have. ))))

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Forget it. These guys are following this chit like some libertine whore with a dildo in one hand and a copy of Cosmopolitan in the other
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Old 10-17-2018, 07:34 PM   #18
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Re: Hard Money Loans


Quote:
Originally Posted by BlueRidgeGreen View Post
That is only a tidbit of one of the greatest scenes of all time.


Yet here, Laertes? Aboard, aboard, for shame!
The wind sits in the shoulder of your sail
And you are stayed for. There, my blessing with thee.

And these few precepts in thy memory

Look thou character. Give thy thoughts no tongue,
Nor any unproportioned thought his act.

Be thou familiar but by no means vulgar.

Those friends thou hast, and their adoption tried,
Grapple them unto thy soul with hoops of steel,
But do not dull thy palm with entertainment

Of each new-hatched, unfledged comrade. Beware
Of entrance to a quarrel, but being in,
Bear ’t that th' opposèd may beware of thee.


Give every man thy ear but few thy voice.


Take each man’s censure but reserve thy judgment.


Costly thy habit as thy purse can buy,
But not expressed in fancy—rich, not gaudy,
For the apparel oft proclaims the man,
And they in France of the best rank and station
Are of a most select and generous chief in that.


Neither a borrower nor a lender be,
For loan oft loses both itself and friend,
And borrowing dulls the edge of husbandry.

********
This above all: to thine own self be true,
And it must follow, as the night the day,
********

Thou canst not then be false to any man.
Farewell. My blessing season this in thee.



((((Sorry....
I just love that.
Always have. ))))

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I'm reporting this post. Didn't like reading it when I was 17, sure shouldn't be subjected to it 40 years later.

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Old 10-17-2018, 08:11 PM   #19
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Re: Hard Money Loans


Some gems of wisdom in that post of the Bard from BRG................
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Old 10-18-2018, 05:44 PM   #20
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Re: Hard Money Loans


Just a little quiz for fun. No cheating by googling it,who was the most plausible real Shakespeare ?

I'll drop a hint initials were S.F.B.

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