Hello all, I would like to know what kind of resources some of you investors use in acquiring hard money loans. I have a couple individuals in mind which I have not contacted yet. My purpose in acquiring hard money loans is to put downpayments on investment property. Also, to cover loan costs and to have contingency money available for things like covering expenses in case of vacancies or negative cashflow, etc.

A hard money investor will lend 65% of the value of the property you are purchasing or refinancing and sometimes go to 70%. They charge anywhere from 3-6 points and interest rates of 10-14%. There are probably better options out there that you havent discovered. You can get 100% for an investment property thru a conventional lender.

Those 3-6 points are usually for the broker. I have a couple of direct hard money sources that run 0 pts and 12%

I agree with Paul. Make sure you are borrowing money from the actual lender not a broker if you decide to do hard money.

I would steer you away from HML in general. There are much less expensive sources of capital out there if you spend a little time looking.

there are no hard money sources that dont charge at least 2 points.

3-6 pts is a bargain! Mostly 9-10% is very common...

Thanks for the input. My feelings are that I probably could get a HML at 0 pts. and somewhere at 10%. I'll be looking at some investments in about a month or so after I pass my broker's exam, get with an agency, and get a job. After all that is done, I'll hit this issue hard. You guys are great!

I'm telling you. You will never get a HML with no points. If you do, call me with the name of the company and I'll send you $500

maybe its private money from a family member or friend. id like that number too thats offering 0 points for HML.

You would be surprised where you can find Hard Money! Work on finding your own money sources. Make friends with Financial Planners and show them how much better your projects return than a CD and they will recommend you to their clients.

Okay maybe your best friend will give you $200,000 and not charge you any points. Most of us dont have best friends like that and guys that have $200K to lend are in business to make money not help you out cause youre a nice guy.

I've got at least 30 hard money sources that I've worked with from Bevery Hills to Yazoo, Mississippi AND THEY ALL CHARGE POINTS!

Just FYI and to help you out... HML should only be thought of as the last resort. Hard Money Lenders usually loan up to 60-60% and maybe 70% on exceptions and if it makes sense. Historically HML carries an interest rate of 13% but nowadays you can have some luck in finding 10% Hard Money Lenders.

P.S. Please post or email me if you have any more questions.

Thanks!

Some of my best sources of cash has been friends and family. One of my best friends from high school has given me more than $200k. He doesn't charge me any points at all, nor do I have to make payments. Instead I give him a fixed % return on his money when I cash out of the deal.

Another guy I know does something similar with his friends, but he offers them 2% per month! They don't charge him points.

I think the trick here, as was pointed out above, is to find creative sources of money. I love the idea of talking to financial planners. It would be fantastic if we could start a discussion on how to approach them and get them to take us seriously.

Hard money is "institutional." Money you borrower from a private party is "private money." Hard money lenders all charge points, private money lenders might not.

Also, VERY IMPORTANT POINT, the 65-70% LTV limit offered by HMLs is typically based on the AFTER REPAIR VALUE, not the AS IS VALUE. All other lenders base their LTV limits on the lesser of the current value or contract sales price. Therefore, if you are able to buy at a discount, and need short term financing for acquisition and rehab costs, HML lenders might be able to do the loan with zero to little out of pocket can make sense (if the #s work).

i agree with sammy

thats how i understood the difference between private money and hard money lenders. private money are personal friends and family. im assuming abundantone is referring to this type of source where he/she can get 0 points.

HML could care less if the investor defaults on the loan since they have a property with enough equity as collateral.