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Hard Money Loans For Builders
Please make sure all LOs have this
How to find active builders and spec builders.
one way is to
go to realtor.com, choose a large city
go to filters, click home, age no min, and less than one year. This should list the new construction homes.
get the addresses, the agent usually doesn’t want you speaking with their client, however, call the agent anyway and let them know that you can help their builder to build more homes, and sometimes they will introduce you. if not, then
do a Google search for parcel search using the city, county and state
. Usually, they have a gis map, and you can use it to locate the owner and the owner’s address, where you can further search and get a cell phone.
realtor.com is a great source to see who is building where and at what price.
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This discussion was modified 1 year, 3 months ago by
Gustan. Reason: Wrong information
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This discussion was modified 1 year, 3 months ago by
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3 Replies
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Hard Money Ventures Call 801 318 8310 Text 310 713 7194 NO DOC, NO DSCR, NO DTI FIX AND FLIP
PROPERTY TYPES: Residential (1-4 Units) LOAN AMOUNT $100,000 – $6,000,000 ■ 80% of Purchase and
MAXIMUM LOAN TO COST
MAXIMUM LOAN TO AFTER REPAIR
SOMETIMES 85% ■ 100% of Rehab Costs
VALUE 70%
TERM LENGTH 12 months, up to 18 at lender discretion
RECOURSE Full Recourse NO DOC, NO DSCR, NO DTI GROUND UP
PROPERTY TYPES: Residential (1-4 Units)
LOAN AMOUNT $150,000 – $6,000,000
■Up to 75% of the lower of land value or purchase
MAXIMUM LOAN TO COST
MAXIMUM LOAN TO
price/60% if unpermitted, plus 100% of construction ■ Max 80% of total project costs
■ EXPECT TO PAY 20% TO 25% OF ALL COST
APPRAISAL 70%
TERM LENGTH 12 months
RECOURSE Full Recourse
BORROWER MUST SHOW THEY’VE BEEN ON TITLE TO NO LESS THAN 2 PROPERTIES WITHIN 4 YEARS THAT SOLD OR OTHER PROOF SHOWING SPEC HOMES BUILT AND SOLD.
THE TYPICAL PRICE IS 2 POINTS AND 14% INTEREST
HARD MONEY PRODUCTS ARE 16% ANNUALLY SO ADD YOUR POINTS ON TOP.
BORROWERS CAN HAVE 7 LOANS ALL AT ONCE, WITH A TOTAL LOAN AMOUNT UNDER $6,000,000
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Great breakdown Thanks Gus!
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Unlike a bank or institutional loan, hard lending has a unique proposition. It is especially useful for builders when they need money since it is guaranteed against the asset being acquired.
The following are some of the important features of money loans for builders –
Hard Money Loans for Builders Key Features
Expedited Approval: Builder hard money loans are easy to acquire. They are available much earlier than built-approved loans, subject to a few conditions, and must be applied twice. The hard money lender is contacted after the applicant has placed the loan request and the previous link. These only take a dip or double days.
Coverage of More Projects: These loans can be utilized for new buildings, reconstruction, or land development, to name a few.
Funding Duration: The time in which they are effective varies, but on average, it is between 12 and 3 years1.
No Percent Limits: Find it difficult to pay the contractor? Never fear about hard money loans built for construction. An LTV of more than 20% or even up to 100% is easily attained.
Interest-only payments Aside: Although payments for the construction will seem high, they can usually be avoided by quitting the interest for only one year and, at times, even for two.
How to apply for a Hard Money Loan
Secure your Papers: Obtain a well-written document that supplements appeal papers, idea-and-getter accounts, and all the day-to-day expenses to complete the deal.
Submitting the Application: Apply for the loan with one specific lender and prepare all the required documents.
Loan approval and funding: First, the borrower is approved for the loan, and then, depending on the amount, the loan is paid in stages, as dictated by milestone achievements and inspections.
Finishing All The Work: Use the funds to bring the construction or renovation project planned further to life.
Refinance or Sell: You should be able to refinance into a conventional mortgage or sell the property at the mortgage’s maturity to liquidate the loan’s debt.
Considerations
Loan Costs: A typical hard money loan has higher interest rates than standard loans from banks, credit unions, or other financial institutions.
Loan Duration: An exit strategy should be clear to justify these loans within the short term.
Assessment: Be sure that the lender has a good reputation and is known to work with builders.
Right, let me present a more comprehensive explanation of the steps and considerations when getting a hard money loan for builders, including some relevant information about the lender.
How to Get a Hard Money Loan
Find Loaners: Information about hard money lenders is available at professional, reputable sites. Make a note of the difficult money lenders who regularly appear and have good reputations.
Local Lenders: Sometimes lenders have reasonable terms and have a stronger grasp of the local market. Real estate investment groups in the area can also be sought for recommendations.
Prepare Your Documents
Project Plan: This should be a detailed schedule of the planned activities or works to be undertaken and estimates of their costs.
Financial Statements: Personal and business financial statements provide evidence of financial soundness.
Property Details: The details about the property include the purchase price, the market rate, and the value after the repair (after-repair value or ARV).
Submit Your Application
Application Process: You will complete the lender’s application form and other documents for submission.
Communication: You should be prepared to ensure that you explain certain aspects to the women in charge regarding the project and its financials.
Loan Approval and Funding
Approval Process: The lender reviews the application and sometimes requests a property valuation or inspection on location.
Funding Stages: When the project is approved, project funds are often issued in parts, depending on goals and inspections.
Complete the Project
Use Funds Efficiently: Use the loan proceeds to fund your construction and building renovation according to the designed plan.
Project Milestones: Achieve project milestones to maintain funding and facilitate project advancement.
Refinance or Sell
Exit Strategy: You should have a proper strategy for repaying your debt by getting a traditional mortgage or selling the property.
Refinancing: Once all the construction is complete, bring long-term financing to repay the hard money lenders.
Additional Considerations
Higher Interest Rates
Interest Understand: Such loans come with high rates of interest, which could be between 8 and 15 percent for a hard money loan.
Short-Term Solution: These loans are meant for short periods of time, such as 12 to 36 months.
Loan Fees
Origination Fees: Be cautious about origination fees, which may be 1% to 3 % of the total loan.
Other Costs: Numerous other costs are also involved, including appraisal fees, evaluations, and other legal fees.
LTV Ratios
Loan-to-Value: To clarify, most hard money lenders will cover about 70 to 85 percent of the property’s cost of value. In some cases, over 100 percent has been covered for the construction cost, all due to the equity in the land or property.
Reputation of the Lender
Due Diligence: Do some background research to ensure the funds are from a stable source and that the lender has a clean history of lending.
Example Lenders
Lending Network:
Specialty: Offers easy loans for flip projects, fixes, new constructions, and rental properties.
Advantages: Low competitive rates to fast closing times.
GCA FORUMS Mortgage Group:
Specialty: They offer many services, from fix, flip, and new constructions to rental loans.
Advantages: They cover the entire nation, and the terms are flexible.
Non-QM Mortgage Lenders:
Specialty: Focuses on funding involving fix-and-flip, rental, and new construction loans.
Advantages: It has been able to offer very competitive terms, and its approval time is very low.
GCA Mortgage Group:
Specialty: One of the biggest fix-and-flip loan providers in the country.
Advantages: Substantial experience and simple lending.