How to Make Real Estate Financing Easier: Simple Way to Raise Credit Score Fast

/in

Raise credit score fast with this simple investors’ trick.

New and seasoned investors alike prioritize one thing in real estate: financing.

Available, fast, cheap funds are key to a smooth career. And a high credit score is key to smooth financing.

We see investors make one key mistake that wrecks their credit score: they use personal credit cards for business expenses. This one mistake costs people tens of thousands of dollars in quality financing.

Let’s dive into this mistake and see what simple options you have to raise your credit score fast.

How We Help Raise Credit Scores Fast

Just this week we’ve closed two different loans to help clients raise their credit score.

They both needed long-term loans for the rental properties, but their scores were too low from the high usage on their personal credit cards.

We also just had an inquiry from another lender who’s looking for us to help their client pay off his credit cards so he could qualify for their loan.

What Causes a Low Score for Investors?

What causes this issue?

The #1 factor that determines credit score is payment history. On average, investors are responsible about timely payments. So what gives?

The #2 factor deciding credit score is your credit usage. This is the ratio between your current credit balance and your total credit limit. Investors often use personal cards to fund rehab on their projects, which rapidly raises their credit usage.

Let’s talk about the solution.

How to Raise Your Credit Score

If your problem is high usage, there are just a few steps you need to take that will drastically improve your credit score (and financing opportunities).

Firstly, you need to stop using your personal credit cards for business purposes. Treat your investments like a business. There’s no reason fix-up costs should impact your personal finances.

Secondly, get a usage loan to get your personal balances down now. When that money doesn’t report on your credit, your score improves almost immediately.

Lastly, open a business card to use for projects moving forward. Once your credit score is back in a good spot and you have a functioning LLC, apply for a business credit card. Balances on this card won’t reflect on your personal credit.

We’re happy to give you a hand at any step of this process.

How to Move Forward

Leverage is king in real estate. As the markets stay tight, interest rates stay high, and bigger institutions elbow their way into the lending space… Credit score only gets more important.

We don’t want to see a low credit score be the reason you don’t succeed in real estate.

If you need any guidance on your financing journey, don’t hesitate to reach out to us.

Want more info on business credit cards? Check out this video on our YouTube channel.

Second Mortgage Loan Explained: Real Estate Investing Tips

/in

How to use a second mortgage loan as a real estate investor (and where to get it!).

In real estate investing, you’re going to need some extra money every once in a while.

Getting a second mortgage on your investment properties can be a way to get this money.

Let’s go through what a second mortgage loan is, how you can use it, and why they’re an important tool.

What Is a Second Mortgage Loan?

Put simply, a second mortgage loan is a loan that’s put behind your first mortgage on your property.

If you have a mortgage and you have good equity (meaning you’re under 80% on the loan to value), you can look at a second mortgage.

Why is a second mortgage so powerful for a real estate investor?

It unlocks the equity that has you trapped.

When all of your money is tied up in your properties, second mortgage loans are a way to free it.

How Can a Real Estate Investor Use a Second Mortgage?

Once you free up your equity with a second mortgage, what can you do with it? Your second mortgages probably aren’t going to be a huge amount of money – not enough to buy an entire new property.

But here are a few common uses of a second mortgage:

  • Finishing an over-budget flip.
  • Upgrading a rental property for a new tenant, refinance, or sale.
  • Using it as a bridge loan to buy your next project before your current one is finished.
  • To pay down credit card balances to lower usage and raise their credit score for their next bank loan.

In any situation where you need quick cash for your business, second mortgages are a great option. They’re the perfect way to tap into the equity you already have to reinvest in your business.

How to Get a Second Mortgage

There are 3 main places you should look to get a second mortgage.

  1. Some local banks and credit unions offer HELOCs up to 65 or 70% on investor properties. So if you have a property that has that kind of equity, that’s your number one go-to source.
  2. Real, local hard money lenders like us who are flexible and understand real estate investing will offer second mortgage loans. We don’t fit loans into a small box – we’ll help you figure out whatever you need whether it’s a second, or even a third, mortgage.
  3. There’s something we call real private money. These are real people from your community who will lend you money. If they lend to you, they’ll get a better return on their money than they would in a bank, and typically a safer return than they’d get in other investments. 

Help with a Second Mortgage Loan

If you want help finding the right way to tap into your equity, reach out at Info@HardMoneyMike.com. We’d be glad to help. 

Wondering what other lending options you have out there as a real estate investor? Download this free resource to learn your options.

Happy Investing.

What Is ARV? (And How Does It Impact Real Estate Deals?)

/in

How does value-add property investing work? And what is ARV?

After-repair value (or ARV) is one of the biggest concepts used in real estate investing.

Let’s talk about what ARV is and how to calculate it.

Value-Add Real Estate Investing

The type of real estate investing we specialize in involves value-add properties.

This means you buy properties at a lower price, change them in some way, then sell for more. This could look like:

  • Splitting up a rental into multiple units
  • Adding a bedroom
  • Doing needed repairs and renovations
  • Etc.

The property’s value at the end of your project will be more than the price you originally bought it for.

That higher ending value is referred to as the after-repair value. This value is decided by either: 1) what it can sell for on the open market, or 2) what it will appraise for (if you’re going to hold the unit as a rental).

How to Estimate ARV

All of the financials of a value-add real estate investment are dependent on the ARV. How do we decide the ARV number? Well, it’s really just an educated guess. Let’s go over some of the key factors used in estimating an after-repair value.

The Amount of Work and Quality of Work

The work you put into a property is what adds the value. So, how you’re changing the property is a good indicator of the ARV.

For example, adding a bedroom or granite countertops will impact the future value more than just a fresh coat of paint.

However, the planned work can’t be the only thing ARV is based on. After all, you can’t guarantee the quality of work will really turn out to be worth it. So there’s another important factor in estimating ARV.

Comparing to Similar Properties

To make our estimate slightly more accurate, we’re going to look at properties that are just like yours but finished. Here are the criteria you’ll use to calculate ARV with comps:

  • The same subdivision. Comp properties, at most, should be within a half mile of your property.
  • The same size. What’s the square footage? Don’t compare a 1,200-square foot place to a 2,000-square foot place.
  • The same condition. What will your property look like when it’s finished? Look at other properties that already look like that.
  • Sold within the last 3-6 months. It’s not accurate to use the list price for a property that hasn’t sold yet. You can only guarantee the actual value of a property when it’s been purchased in your market.
  • Sold without concessions. Concessions mean the seller is helping the buyer purchase the property. Some sellers will contribute anywhere between 3% and 6% of the sale price to help the buyer cover closing costs (especially in a FHA or VA market). This is important to watch out for in comps, because if a house sold for $200k with a 5% seller concession, then the seller was really only able to sell if for $190k.

Market Conditions

We usually have a ballpark idea of what the market will look like in the next 6 or so months. This is important to factor into your ARV.

For example, 2022 saw a market decline after May. So, if you were comping out a property in June of 2022, you’re expecting the market to get worse, so you factor that in. Maybe you take another 5-10% off the ARV you calculated based on comps to set a realistic expectation for the future market.

Why Is ARV So Important?

When you’re calculating the ARV of the property, remember to be truthful with yourself. Work with comps to get a full picture of your actual after-repair value. Fudging these numbers only hurts you.

ARV has a direct impact on the amount you can get from a lender. Accurate after-repair value is important to your investing financials. You can read about how ARV affects LTV here.

You can also use this free tool to calculate your lendable amount on a property based on ARV.

As always, reach out to Info@HardMoneyMike.com with any questions.

Happy Investing.

70 Percent ARV: Why Can’t I Get More for My Real Estate Deal?

/in

The real reason your fix and flip lender won’t give you more than 70% ARV…

One thing new investors ask all the time:

Why do lenders only lend 70 or 75%?

Let’s go over the numbers and see how lenders come up with that 70% number.

What Is ARV and the 70% Rule?

The number we’re talking about is what percentage of the after-repair value (ARV) a lender will give you.

The ARV is what you can sell a property for after flipping, or what it can be appraised for on a refinance for a BRRRR rental.

Here’s an example of what a 70% ARV might look like:

You buy a property. The market shows it will sell for $200k after it’s fixed up. If your lender offers 70% of the ARV, that’s the maximum amount your loan could be. In this case, 70% of $200k is $140k. So you can get up to $140,000 as a loan when you buy this property.

So that’s $60k worth of value that’s not being covered. This is where investors ask the question… There’s still a lot of money here. Why can’t I borrow against that extra $60,000?

Let’s dive into why lenders stop at 70%.

Why Do Lenders Stop at 70% ARV?

If lenders stop at 70% of the ARV, what happens to the remaining 30%?

Profit

First, is profit for you. Why do you invest in real estate? Because you want to make a profit. And if you don’t factor in profit at the beginning of your deal, there’s not going to be any leftover for you.

So as lenders, we build in a 10-15% profit margin for you. Let’s say on average, it’s 12.5%. That amount comes from the 30% of the ARV not covered by your loan. 

In our example $200k property from earlier, 12.5% is $25,000, which will be profit for you at the end of the project.

Realtor

There are a few other people involved in this process, especially on the selling side.

When you bring in a realtor, you can expect to say anywhere between 4.8% and 6%. To keep it easy, we usually estimate 5%.

So of your ARV, we’ve already taken up 17.5% between your profit and your realtor.

Closing Costs, Cost of Funds, and More with a 70% ARV

Closing costs vary, but it’s safe to assume they will cost 1.5%.

With all the costs so far, we could be looking at anywhere between 17% and 22%, but an average of 19% total.

After you’ve purchased the property and started fixing it up, there will be more costs. Two major areas that should be factored into your budget are interest on your loan and a general overage budget.

Between these extra costs, we’re sitting at an average of 29%…

Which is exactly why lenders leave 30% of the ARV off of the loan they give you.

Making Sense of a 70% ARV

With real estate investing, the money’s in the money. Understanding and feeling comfortable with the numbers is the fastest way to start getting into great deals.

You don’t want to get into a deal that won’t be profitable for you. If you won’t get at least 10-15% profit, why do it? Your lender should leave space for your profit and other costs that come up.

Have questions or a deal where you need help with the numbers? Contact us at Info@HardMoneyMike.com, and we’d love to see how we can help.

You can also get more resources about real estate investing on our YouTube channel.

Happy Investing.

The Funding Ladder: How to Get the BEST Real Estate Financing

/in

What does it really look like to get the best real estate financing? Let’s go step-by-step.

Hard money is a stepping stone.

You start here. But you also need to know where you’re going.

One of the most common questions we get from beginner real estate investors is:

“Who can I borrow money from? How do I step out from just using hard money?”

We want to get you started with the money that makes sense for you now – but we also want to show you how to work up to Wall Street money, OPM, or even funding with your own cash.

We think of this journey as The Funding Ladder. Let’s go over what beginners should know about real estate financing – and how to get to each rung of the ladder.

The Importance of Real Estate Financing

Funding is at least half of what makes investing successful.

Yes, you have to buy good properties and get them at a good number. But the right funding is what truly seals a deal.

  • Sometimes that means the funding is fast, so you can buy the good, available properties that need a quick close.
  • Sometimes it’s funding that’s cheap. Cash flow is king, and lower-cost financing increases your cash flow.
  • Sometimes it needs to be flexible. It needs to fit what you can apply for and get.

The Funding Ladder: 6 Levels to the Best Real Estate Financing

As you go from level to level, you accumulate more money because you save more money. Every time you step up, you’re going to put more money into your pocket, have more deals available, and at better pricing.

Here are the 6 rungs of this funding ladder.

#1: Partnerships

Typically, most people will start in either partnerships or hard money. 

Partnerships are great because you don’t have to provide any of the funding. The partner will provide all the funding – and maybe even some expertise. The negative about a partnership is typically they’re going to take at least 50% of the profits and probably be a little too involved in the project.

But when you’re starting out and you need some experience and you don’t have the money, this is a great way to go too. You could do two or three deals with the partner, build up your experience and cash, then move to the next level. 

#2: Hard Money

Secondly is local hard money.

This is asset-based lending. For real estate investors, this is what hard money used to be until they started changing the name to private money. Now, sometimes it gets a little confusing. Hard money, private money, fix and flip loans, rehab loans – they’re all referring to the same thing.

What you get from hard money is true investor-grade financing where they lend a higher loan-to-value, so you don’t have to put as much into the property. 

They will be flexible. They will look at unique deals: land or small commercial or any type of unique property. Local hard money likely won’t care much about your credit score – so it’s a great option if your score is sub-700. 

Additionally, hard money lenders care less about your experience. As long as your deal is sold, they might not require you to have completed any projects before.

Hard money is typically fast also. So if you need to close something in five days instead of 10 or 30, local hard money is the best real estate financing. 

The cons of hard money are that:

  • They’re smaller lenders with a smaller fund – so it’s possible for them to run out of money.
  • They tend to be more expensive. It may cost you 1 – 1.5 more points than when you go with Wall Street private money.

#3: Wall Street Private Money

Next is what we call Wall Street Private Money. These are large firms.

The best part about these is they have seemingly unlimited funds.

They have similar interest rates as local hard money. Sometimes hard money is actually cheaper on the rates, but you’ll find private money 1-1.5 points cheaper.

The other benefit of private money is it could lend in multiple states and multiple regions. Typically, your partnerships, hard money, or even local banks will not lend out of their region.

They typically also could do longer terms. It’s not uncommon for them to do a 12 or 18 month. We don’t suggest that you take longer than 6-9 months on a fix and flip loan because the interest eats away at your profits every month. But the option is out there with private money.

Now, the negatives for the Wall Street private money:

  • They have a box. If you don’t fit in their box, they won’t make their funding work for you. They find enough people who do fit in their box. So, if a property is unique, rural, etc, then they typically won’t bother.
  • Typically, they’ll require 3-5 years of experience to get their best rates and terms. 
  • They’re also going to require that you have a decent credit score. The actual requirement changes, but right now it’s a minimum of 660, with a preference of 720+.
  • Wall Street private money lenders won’t give you any escrow advances. When you close, they may fund 100% of your escrow for your fix-up, but they won’t give you any advance to start. So if you have like a $60,000 budget to fix up the property, they want you to put in that first $20,000 and then they will reimburse you.

#4: Local Banks

The next rung on the ladder of the best real estate financing is local banks.

There are a lot of small to mid-size local banks that love to lend to real estate investors. Rates are high currently from the Fed, but banks are still 1-2 points cheaper on the interest rate even compared to the Wall Street money points’ cost.

The negatives with local banks are:

  • The speed. It can take two to four weeks minimum for them to fund a deal, which could cause you to miss out on deals. 
  • Local banks require certain credit scores, too, like private money does.
  • They’ll also require money down and investing experience.

#5: Real OPM

Next is what we call real OPM (other people’s money). This is truly the best real estate financing. Regardless of your experience level, you can work toward getting OPM. Any rung on this ladder benefits from Other People’s Money.

Real OPM is money from real, normal people, not institutional lenders. It could be family, friends, or other people in your community.

These people want better returns for their money than they can get at a bank. Lending to you can be a way to get that secured return. out there looking for better returns. 

You can also get a much better rate with an OPM lender than at a bank, credit union, private money, or hard money lender. There’s nothing out there that’s faster, cheaper, or easier to get.

Once you build an OPM relationship, your lender will want to give you money as much as you want to get it. It’s simple to call them up and let them know you found a good deal. There’s no underwriting, no credit checks, and oftentimes they can fund the full amount you need.

It’s important to attract and keep your OPM lenders (if you want more help setting this up, reach out to us – this is one of our specialties!).

#6: Lines of Credit

As you accumulate properties, you’ll want to move on to lines of credit as a funding source. This is where banks (whose loans are slow) can offer you a product that’s quicker than the rest.

A bank line of credit is like a big HELOC, except instead of being on one property, it spans 5 or 6. This line of credit is immediate funding – which is great for fast auction closes.

When you have a large line of credit at your disposal, all the wholesalers and local sellers will go to you first because they know you’ll give them a fast close. 

How Do You Get the Best Real Estate Financing?

We want people who come into this business to understand that hard money is a stepping stone. They’re going from here, but they also need to know where they should be headed. 

We want to educate people, make them comfortable, confident real estate investors, and help where we can along the way.

Have questions about any point in this process? Want to talk with someone about how to go from where you are now up to the next step? Reach out to us at Info@HardMoneyMike.com. 

Happy Investing.

What Is Gap Funding? (What to Do When Your Main Loan Leaves Gaps)

/in

What is gap funding? Let’s go over 4 types of small loans: bridge, reserves, rehab, and usage.

The gaps lenders leave on real estate projects are getting bigger.

They’re asking you to put more money in. Leave bigger reserves. Have better credit scores.

We see this daily as we help clients with small loans. Let’s go over some of these small loans that we call gap funding:

  • Bridge loans
  • Reserves
  • Rehab costs
  • Usage loans

Bridge Loan Gap Funding

Bridge loans: if you have a project that’s either on the market or going on the market, but you need to get into your next project. You have to keep making money, but your capital is tied until that first property sells. 

These bridge loans are usually between $10,000 and $75,000, used for a down payment on your next project.

How it works: you put a lien on both properties, then when the first one sells, you pay off the bridge loan. This can keep you going from flip to flip with no pause in projects.

Reserves

Another spot in the real estate investing process for gap funding is reserves. Banks are requiring more money in reserves to cover any unknown expenses or payments.

We just did two loans to help with reserves. 

One was for a flip. Someone needed to borrow money. They had a property on the market. They’re buying their next one, but the lender that was funding their new deal required six months of reserves. We did put a second mortgage, on the property. When it sells, we’ll get paid off, and they’ll be onto their next deal. 

The second was an investor who needed reserves for a long-term loan. He was refinancing his investment property, but he was short on reserves. We were able to use another property in his portfolio to do a loan. Once the cash-out refinance is done, he’ll pay us back.

Funding Gap in Rehab Budget

Maybe your primary loan didn’t cover as much of the fix-up process as you ended up needing. This is another instance where gap funding comes in handy.

We also had another unique situation with a client recently. The borrower got the money in their escrow account when they set up the loan… but the lender would not release any escrow funds until he did at least a quarter to a half of the project. Yet he couldn’t start the project because he needed the funds from the escrow.

We stepped into this chicken-and-the-egg situation and helped him with a lien on another property to give him the funding he needed to kick off the project. When his other lender released the escrow, he was able to pay us back.

Usage Loans

Sometimes the requirement from banks that kills investors is the credit score limits. For many investors, this means their credit usage is too high – since they use lines of credit for their real estate projects.

We had a client out of Michigan who was trying to get a DSCR loan. He bought a property, fixed it up, and was going to do a DSCR refinance to get all his cash back.

But he used all personal credit cards for the project. This tanked his credit score. So when he applied for the DSCR loan, he was at an almost 10% interest rate with 3 points.

To help him, we did a quick usage loan to pay off those credit cards and let his credit score go back up. Then he can get into a long-term loan at a good rate with fewer fees.

Other Small Loans for Gap Funding

We’re able to help people in any of these circumstances who need a small gap funding loan.

In fact, in any situation where you need a loan and have a good property to put a lien on, we may be able to help you.

If you have any questions on this or other loans, reach out to Info@HardMoneyMike.com.

Happy Investing.

70% ARV: The Hard Money Trick That Could Cost You

/in

When a hard money lender tells you they’ll give you 70% ARV, what does that really mean?

Hard money lenders often say they lend up to 70% or 75% of the after-repair value (ARV) of a property.

Did you know that’s often misleading?

When private lenders (big hard money lenders backed by Wall Street funds) say they lend up to 70% of the ARV, there’s a slight trick that some borrowers miss.

Let’s go over the differences that “70% ARV” might mean for different lenders, so you can maximize your LTV.

The Full Cost of Your Flip

One thing to remember when you’re looking at fixed and flip loans: there are a lot of other costs besides the down payment. You’ll also have closing costs, points, interest, insurance, and other expenses not included in the amount most lenders give you.

We want to make sure we minimize how much comes out of your pocket so you can do more deals or at least get to that first deal.

The 70% Myth

Typically, most lenders in this market will lend you up to 70% of the after-repair value. This ARV is what you’ll be able to sell a property for (not buy it for). It’s how much it should be worth after it’s fixed up.

But here’s the caveat big hedge fund hard money lenders have:

That total 70% of the ARV is split between the purchase price and rehab. And typically, they’ll do 100% of rehab costs but limit the purchase price to 85%.

And this is for their best clients. You’ll see these LTVs cut, depending on your quality, the size of your market, and the location of your property. Smaller markets can go down to 80/90 for purchase price/rehab. Rural properties could go down to 65% overall – if they’ll even lend to you at all.

So the 70% is only for the best properties in the best areas. Let’s dive in and find out exactly how they don’t get to that 70% that they promise you.

Example of the 70% ARV Myth

Let’s look at a property that has an ARV of $200,000. This is what you think you’re going to sell it for, based on the comps.

If our hard money lender is going to give us 70% of it, that’s $140,000 max.

This works for most deals. As long as you follow these budgeting guidelines:

  • Real estate agent: 5%
  • Lender fees: 8%
  • Closing costs: 2%
  • Profit: 15%

Now, let’s say you’re purchasing a property for $120,000 and you’re going to put $20,000 into rehab. This gets you right to the $140k your lender will give you.

But now we got to remember one thing:

Best case, they’re only going to lend you 85% of the purchase price. In this case, that’s only $102,000. (They’ll still cover 100% of the rehab in escrow). 

This leaves $18,000 you’ll be paying for out-of-pocket. Plus, many of these lenders require 6 months’ worth of reserves (we’ve even given short-term loans to investors just so they had enough reserves to get a loan from one of these other larger hard money lenders).

Hard Money Lenders With a True 70% ARV

A smaller, local hard money lender like Hard Money Mike has a different approach to LTVs. Let’s walk through this example with the same $200,000 ARV property.

When we lend 70% of the ARV, that’s a true $140,000 for the right client and deal. This means the purchase is fully funded – plus you get the $20,000 in escrow for rehab costs.

Finding the Right Hard Money Loans

The offer from the bigger lenders will be right for some people. But if you want to maximize your leverage, small hard money lenders like Hard Money Mike give you an alternative.

Want to see if we have the right loans for your project? Reach out to us at Info@HardMoneyMike.com.

Happy Investing.

How to Save a Stalled Real Estate Project

/in

A good deal can still create a situation with a stalled real estate project. Here’s how to save it.

One of our favorite loans is the type that fixes a stalled project.

Stalled real estate projects most often happen when:

  • You run out of money before you run out of work to do, so the house can’t get on the market.
  • A refinance on a flip doesn’t work out, but the original high-interest loan designed for the short-term loan is racking up payments.

This situation accumulates interest, taxes, and other carry costs that you were not anticipating.

We love saving these stalled real estate projects. We don’t care if our loan is in second, third, or fourth position, as long as we see the deal coming through.

Let’s go through a couple examples of times we’ve recently helped clients with stalled real estate projects.

Funding the Escrow on a Stalled Real Estate Project

For this client, we funded him money in escrow to fix up a property.

He had another lender first. It was a big, national fix-and-flip lender who had a lot of money sitting in escrow for him. But, they wouldn’t release any money until he got his other properties finished first.

This client had a lot of other properties going at once, so he didn’t have the cash flow to fund this one. He also didn’t want to sit on his new property, waiting until his lender decided to give him his cash.

After four months of fighting, he decided to get a loan through us instead. We were able to fund the whole thing. We used a lien on another property of his properties to fund the whole escrow.

Now, he’s able to get this property done and on the market in time for spring. Once he sells, the other lender will release his funds, and he’ll be able to pay us back.

Funding an Over-Budget Fix and Flip

One of the most common stalled real estate projects we see: a fix-and-flipper runs out of money.

  • The budget was too low to begin with
  • The flipper got priced out of material and labor costs.
  • An expensive surprise was found in the house that wasn’t accounted for in the original budget.

We had a client come to us recently in this exact scenario. He knew he needed an extra $20,000 to $25,000. He wasn’t completely sure which.

He’s hoping it’s only $20k, but we gave him a loan for $25k anyway. This allows him to:

  • Not piecemeal a budget (getting a couple thousand funded here, a couple thousand there, etc).
  • Finish the project faster.

Now, he won’t miss the springtime market.

Why We Do Loans on Stalled Real Estate Projects

We’re glad to help real estate investors when money for projects falls just a bit short.

Anytime you have a good project or a good loan-to-value, us lending to you makes a win-win for everyone.

Need a small loan to finish a stalled project? Reach out to us at Info@HardMoneyMike.com, and we’ll see how we can help!

Home Run

/in

From start to finish, Evan really hit a home run with this one. Evan, one of our most esteemed sluggers when it comes to fixing up homes, saw this house and was immediately determined to get it out of the bush leagues and into the Big Leagues.

 

The people selling the house had really let it fall to pieces, and the purchase price was set at $169,000, which was below market at the time. There was some interest, but because of how much work needed to be put into the home, Evan came out on top with the bases loaded.

Rounding First

Evan had to start at the bottom with the foundation. There were cracks in the concrete throughout the home, which hadn’t reached the walls yet, but would have if left much longer. He dug tunnels under the home to access the support beams, then placed foundation repair pilings under each major beam. He lifted the home to the correct level, installed support cylinders under the beams, and shimmed them to the proper height.

Rounding Second

Next, he moved on to the floors and walls. The entire house needed new floors, including carpet, hard wood, and laminate. For both the floors and the walls, he kept his color theme neutral and went with grays and browns throughout the home, so as to make the home able to flow with any interior design that the eventual new homeowners would want.

Rounding Third

As he was nearing home base at this point, he had some last-minute touchups that were in desperate need. The kitchen needed new cabinets and countertops, and the bathrooms needed new countertops and sinks. He also spruced up the landscaping around the home to really make the house look sharp from the outside in.

Bring it Home

Evan really was the “cleanup batter” for this house. The bases were loaded – the house needed a lot of work. And with a full count staring him down.. BOOM! A dinger! A bomb! A Moonshot! He slammed it out of the park and brought it home strong. He ended up selling the property for $299,900 to a very eager couple excited to grow their family in that house. Nothing better than a Grand Slam to help bring this house into the Bigs.

 

Do You Need a Hard Money Loan?

With hard money loans, it’s very important to shop around. Every hard money lender will offer a slightly different type of loan, with slightly different requirements.

There is a loan that is perfect for your credit, your plan, and your property. You just have to find it.


Contact us for a Hard Money Loan

Check us out on YouTube

Hard Money Mike funds loans in Colorado, Oklahoma, and Texas.

Why You Need Hard Money in 2023

/in

Institutional lenders aren’t cutting it this year. Here’s why you need hard money.

When the Fed raises rates and big institutions like banks and hedge funds tighten money… Where is the real estate investor supposed to go to get funds?

2023 is a great time of uncertainty. Uncertain times can be the hardest and most expensive – but best! – for buying.

One solution for real estate investors: hard money.

It’s a simple truth. In 2023, you need hard money. Let’s explain why.

You Need Reliability

True hard money is from real people. They need the interest they get from these loans whether times are good or bad, so hard money loans are less likely to change with volatile markets.

These lenders don’t run when they see inflation, and their interest rates won’t fluctuate nearly as much as institutional rates.

In fact, banks’ interest rates are getting closer and closer to hard money rates. In the Colorado market, many banks are only charging 1 point less than hard money lenders.

You Need Hard Money’s LTVs

A huge issue with bank and institutional lending right now is the amount they’ll lend.

We’ve had a recent client share their experience with a big private lender. While they used to lend 90-100% of the purchase price of a property, they’re now offering 49% for comparable real estate in metro areas for certain borrowers. In smaller communities, they’re down to 60% LTVs. 

Banks must do this, not just to mitigate risk, but also to attempt to keep their prices low. Hard money is not this way. Hard money rates and terms are the same in good markets and in inflationary ones. The hard money you get in 2023 is the same hard money you got in 2020.

You Need Flexibility

You need a lender who will not only be able to move with the markets but also work with your specific deal.

Maybe you need a second lien, a unique land loan, a bridge loan to buy your next project, or a bridge to cover the costs of a house that’s been stuck on the market for too long.

Big lenders and banks don’t provide those types of loans. And with the market that 2023 is bringing us, you’ll need all the flexibility you can get with your lender.

You Need an Investor-Friendly Lender

Many smaller banks and credit unions aren’t even open to lending to real estate investors. For your career, you need a lender who will work with people who have real estate businesses.

Larger institutions, however, have raised their credit score requirements so high, it boxes many investors out. Banks have raised their minimum credit score by at least 40 points. They used to take people with as low as a 620; now, it’s 640 minimum.

The problem is, some real estate investors don’t have great credit scores due to high credit usage on the lines of credit they use for flips. Hard money is the answer here, since it doesn’t keep strict score requirements.

Getting Hard Money in 2023

Other types of lenders have raised their rates, increased their costs, and lowered the amount they’ll give you in 2023.

If you need the same amount, for the same price, try hard money loans. Hard money doesn’t scrutinize you as a borrower and make decisions based on the Fed. It bases your loans on your property and your deal instead.

Not all lenders – of any type – will give you the same loan. That’s why we want you to use this free deal analyzer. You can enter information for three hard money lenders (or a hard money lender, a private lender, and a bank) to find out which option will truly save you the most cost.

Any other questions about hard money? Reach out at any time to Info@HardMoneyMike.com. 

Happy Investing.