The trick to success in real estate investing
is to be able to take advantage of great deals when and where
you find them. In order to do that, you need to have a lender
ready to fund you on a moment's notice. You may choose to work
with a broker or directly with a lender. While working directly
with a lender is less expensive, brokers can often be invaluable
to Hard Money deals.
If you run into a bump in the road, you will
drop off the keys and move on. Lenders want you to pay the loan
back, they do not want to sell real estate. In general, you will
be asked to have about 20% of your own "skin" in the
deal. If you can come up with 20% in cash, you may well get the
balance funded from a single lender. If you have other properties
with sufficient equity to come up with the sum, that may work
too. Talk to your lenders to get an idea of what will be acceptable
to them. Then explicitly and clearly explain where the money is
coming from. To stay on the low end of Hard Money expenses, keep
the LTV to 65% or 70%. At higher LTVs, you will be courting extra
points and very high interest rates.
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