the inside scoop on hard money lending for breia

Everything You Need To Know About Hard Money Lending

Dan Leyden | Managing Partner

2Your local lender | www.abl1.net

Agenda

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1. Funding Options2. The Hard Money Loan Process3. Common Problems4. A Strategy To Score A Loan

Your local lender | www.abl1.net


What Is Hard Money?

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Backed by first lien on real property asset Non owner occupied

Source of cash for investment Allows investor $ to be leveraged over one or more

projects One year bridge loan High interest rate Personally guaranteed Quick close (two weeks or less) Asset based

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Characteristics Of Hard Money

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Quick close More proceeds Flexible payments Interest rate only payment Lower monthly cash outlay Significantly less paperwork

required



Loan Process

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Initial Contact Underwriting Closing Rehab

Management Payoff

5 Steps To A Hard Money Loan



How To Score A Loan

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1. Do your homework & be prepared2. Loan application3. Purchase contract

• LLC or Corporation

4. “Skin in the game”5. Scope of work



Common Problems

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1. Contractor issues2. Liquidity3. Not staging4. Local building department5. Take out funding for buyer6. Expectation management7. Lenders running out of money8. Deal profitability



Free Deal Analyzer

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• No more guesswork• Plug in your details to

analyze potential profitability


Our Loan Programs

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Fix & Flip


New Construction

Refinance/Cash Out


Our Fix & Flip Program

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1. Maturity/Structure: 12 months • Interest only, no prepay penalty

2. Loan Amount: $75K - $1.75MM3. Purchase Funding: 60% - 80%4. Rehab Funding: 100%5. ARV Cap: 60% - 65%6. Annual Interest Rate: 11% - 12% 7. Points: 2% - 4%



Case 1: Miramar Fix & Flip


The Loan:Loan Term: 12 months, Interest onlyLoan Amount: $138,000• Cash available for purchase at close: $138,000• Cash to Construction Escrow at close: $0Interest Rate: 11%Points: 3% Appraisal Fee: $400Mortgage Processing Fee: $1000 (application & lender attorney)

The Deal:Purchase Price: $173,250Rehab Budget: $5,000After Rehab Value: $245,000


Net Profit: $49,600


Scenario 1: All CashPurchase Price: $173,250 Rehab Budget: $5,000 Total Deal Cost: $178,250

After Rehab Value: $245,000 Gross Deal Profit: $66,750 Transaction Cost: $17,150 *Borrower Own Money in the Deal: $178,250

*5% Broker Fee, Title Insurance, Property Insurance, Legal Fee



Net Profit: $28,880

Case 1: Palm Bay Fix & Flip


Scenario 2: Hard Money LendingPurchase Price: $173,250 Rehab Budget: $5,000 Finance Cost: $19,320*Total Deal Cost: $197,570After Repair Value: $245,000

Borrower Own Money in the Deal: Gross Deal Profit: $47,430 (ARV-Deal Cost)Transaction Cost: $18,550 How Did We Get There?

20% Down Payment: $34,6503 Points: $4,140Title: $3,465Loan Processing Cost: $1,400• Lawyer: $600• Application: $400• Appraisal: $400• Escrow: $0Insurance: $1,500

* Interest, Points, Loan Processing

$45,155



With The Same Amount Of Working Capital ($178,000)• Borrower with leverage has capacity for 4 projects• 4 projects x $28,880 net profit/project = • Borrower using all cash only has capacity for 1 project =$49,600 Net

Profit

$115,520 Net Profit





Case 2: Sunrise Fix & Flip


The Loan:Loan Term: 12 months, Interest onlyLoan Amount: $175,000• Cash available for purchase at close:

$150,000• Cash to Construction Escrow at close:

$25,000Interest Rate: 11%Points: 3% ($5,250)Appraisal Fee: $500Mortgage Processing Fee: $1000 (application & lender attorney)

The Deal:Purchase Price: $175,000Rehab Budget: $25,000After Rehab Value: $275,000


Scenario 1: All CashPurchase Price: $175,000 Rehab Budget: $25,000 Total Deal Cost: $200,000

Net Profit: $55,750



After Rehab Value: $275,000Gross Deal Profit: $75,000Transaction Cost: $19,250 *Borrower Own Money in the Deal: $200,000

*5% Broker Fee, Title Insurance, Property Insurance, Legal Fee


Net Profit: $29,550



Scenario 2: Hard Money LendingPurchase Price: $175,000Rehab Budget: $25,000 Finance Cost: $24,500*Total Deal Cost: $224,500After Repair Value: $245,000

Borrower Own Money in the Deal: Gross Deal Profit: $50,500 (ARV-Deal Cost)Transaction Cost: $20,950 How Did We Get There?

20% Down Payment: $35,0003 Points: $5,250Title: $3,500Loan Processing Cost: $1,700• Lawyer: $600• Application: $400• Appraisal: $500• Escrow: $200Insurance: $1,500

* Interest, Points, Loan Processing

$46,950


With The Same Amount Of Working Capital ($200,000)• Borrower with leverage has capacity for 4 projects• 4 projects x $29,550 net profit/project = • Borrower using all cash only has capacity for 1 project =$55,750 Net

Profit

$118,200 Net Profit




The Winning Strategy

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1. Find a profitable property2. Put together a good team

• Realtor, wholesaler, hard money lender, house inspector, contractor…

3. Stick with the plan4. Go For It!



Sound Like A Deal?

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Why ABL? Quick closing Don’t need perfect credit score or documented income Banks don’t like “gut” rehabs Leverage for multiple deals at same time Easier for foreign nationals A trusted network for info, advice, & expertise Underwriting transparency Written term sheet No hidden fees Won’t run out of money



Questions?


[email protected] | www.ABL1.net |561-450-9272

the inside scoop on hard money lending for breia

Real Estate