OfflineThe other day I saw a hard money lender advertise loans at 80% of ARV. But much to my amazement, today I saw another hard money lender offering 80% of ARV when just a couple of months ago he was making loans at 65% of ARV. His rate was 80% of ARV, 1.5 points at 15%. Does the fact that hard money lenders are loosening up their lending requirements to 80% indicate that they are comfortable with valuations at his level? I have always believed that market rents would provide a floor for pricing. The rental market is strong and many deals can be found that are cash flow neutral or even positive cash flow without much trouble. However, in relation to institutional financing, hard money is relatively short term. Thoughts?
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For us, hard money guidelines always seem way too stringent. We have talked with a LOT of hard $$ lenders and have found the criteria and expense unrealistic in all of our situations. With conventional financing, we are able to do no money down deals all day long, but with hard money it is nearly impossible. They want you to be personally invested in a portion. However, if we find a seller willing to finance a down payment, bank will carry the rest, no problem. No money out of our pocket for purchase. I can see using hard money in a situation where you need cash asap and have a portion to put down and don't mind using your own money, especially if it is a great deal that needs to be closed in cash soon. On the same token, there are so many spectacular deals, that the "perfect deal" comes along several times a day, so that is usually not an issue either. This is just my opinion and experience. Others may love hard $$. We have used PRIVATE $$, and love that route!!
80% is much higher than we have seen lately. The highest we saw a month ago when shopping rates was 70% I believe. Some even offer higher LTV in certain markets....I suppose where the property values are more stable.
Sheila
"If God is for us, who can ever be against us?" Romans 8:31 NLT