The money that you borrow
As a real estate investor you need to be able to borrow money.
Hard Money for Rehabs
Hard money means that you get a loan from a hard money lender
- Generally you don’t have to use your own money for hard money lender
- It’s based on the properties ARV value, after repair value.
- As an example. Let’s say you have a rundown property that the arv value is $100,000,
- The hard money lender will lend generally 65% of the ARV.
- Your job as a real estate investor is to buy the property for less than the ARV including the repair costs.
- Let’s say a cost $10,000 to repair the property to be able to sell it
- So your purchase price has to be
- $100,000 – $65,000 – $10,000 = $55,000
- And to be careful, it should be less than the 55,000 because there’s mistakes that are made when you repair a property,
- So your offer might be $45,000 in cash.
Private Lender
Private lender is a good way to buy properties. I generally spend a lot of time marketing for new private lenders. I teach the perspective private lender that they can use their IRA money to get a good way to return quickly.
Let’s say that the private lender has $200,000 in their IRA.
They go to a special custodian that will liquidate some of the $200,000 in their IRA, to cash, and they can use that money in the name of their Ira to lend to me the investor.
I generally offer 8 to 10% to use the money for 6 months.
This is a cheaper alternative than hard money.
I explained to the private lender that there’s very little risk involved because of the loan value is less than 65%, meaning that the loan and First Position will be no more than 65% of value.
And he gets his money back quickly.
The real rate of return is not 8 to 10%, because I use it for 6 months, so the rate of return is 16% to 20% annual,
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Hard money brokers are lenders who lend money based on the asset and not on the person borrowing the money. They are also called asset lender financing. Hard money is expensive money because it charges points and higher interest but it is easier than Traditional Bank financing. It is used and Fix and Flip loans and […]
The money that you borrow As a real estate investor you need to be able to borrow money. Hard Money for Rehabs Hard money means that you get a loan from a hard money lender Generally you don’t have to use your own money for hard money lender It’s based on the properties ARV value, […]
Hard Money Hard Money Loans: An FAQ 1. What are hard money loans and how do they differ from traditional loans? Hard money loans are short-term, private loans secured by real estate. Unlike traditional loans from banks, hard money loans are primarily based on the value of the property rather than the borrower’s creditworthiness. They […]
