Re: Should I use a Hard Money Loan for Rehab? - Posted by Lyal
Posted by Lyal on October 27, 2003 at 06:40:02:
Hard money is extremely expensive for rehabs and IMHO should only be used by experienced rehabbers who have their “team” in place and can get in and out in a pre-determined period of time. From what I’ve seen, inexperienced people ALWAYS guess low on what it will take to rehab a property and ALWAYS guess high on what it will sell for and they seldom include holding costs or contingency money in their estimate of costs.
In short, NO, don’t use hard money if you can use bank money (with all due respect to Jim(MD) I’ve never seen a pre-pay penalty but, when I use bank money, I set it up as a commercial mortgage where there’s a little more lee-way and I can “haggle” over the terms a bit). Even better, if you lack experience, don’t start with rehabs as they are the hardest way to make money in the business.
All the best, Lyal