What a hard money lender looks for when loaning YOU money for your next FLIP!

so today I'm hanging out with one of my hard money lenders and he called me up and he said Chris we think your audience might want to see exactly what I'm looking for before I loaned you the money to buy the house all right round up family it's your boy Chris Haskins with the real estate roundup calm do you know my mission my ministry is to raise your financial literacy through real estate investing and entrepreneurship I'm gonna be bringing you in teaching with you today not at you taking you on site to meet one of my hard money lenders Mike and he wanted to share with you what what is he looking for when he goes out what does he want you to bring to him in order for him to loan you the money let's talk about first what is a hard money lender what is a hard money lender well I'm glad you asked so a hard money lender is somebody basically that loans you money based on the asset based on the asset that's based on the house that is loaning the money to or loaning the money on and not necessarily on the ability of the borrower to pay it back so it doesn't really care about whether you're gonna have the income to pay a back you wants to make sure that if you default so you don't pave what paid with you oh it can take that house back and make this money back all right that's basically where hard money guys looking for he's going to look at your property and have a second eyes opinion on whether it's a good deal on that so that's why I encourage new investors you use hard money there is no credit check he doesn't care about your credit typically speak generally speaking they they're not they're not concerned about you refinancing them later on down the line because generally speaking once again you're gonna sell the house once you fix it up and you must have an LLC or some type of corporation they typically do not loan money to human beings they loan money to entities so if you don't have any LLC set up make sure you go out there and get that you need to have one anyway well you're not gonna be able to borrow money from a hard money lender if you don't and you must typically have a down payment down payment generally ones from ten to twenty percent depending on the deal Mike's going to talk about like he knows money to me he may not charge down payment at all that's because of my track record and the history that I have in the business so if you're experienced you might get favorable terms with a hard money lender as opposed to being a newbie they're gonna make sure that you bring your bringing some skin in the game so let's go to the property we're gonna meet Mike there with another rehabber this guy's sharp he's gonna show you some drawings and Mike's gonna show us exactly what he's looking for and before he actually decides to loan you the money to flip your next house all right let's go round up family what's going down what's going down hanging out with Mike combined what up hey thanks I'm glad you came by to look at this project over here on Fox Hill Road yes flat cell roads a busy road and they're repaving it right now so Chris let you take a look at it it's it's pretty nasty but wouldn't you paint the sidewalks which is great the city's taking care of the neighborhood and that's a good thing yeah you know I will discount this in my house you know my valuation just because it's a busier road and say you go one block over all over that way and to back into the subdivision but this is still gonna be a nice a nice house once it's done a good place to live nice school is down the road yep what we didn't tell you is Mike is a lender round up family I am trying to pull her into you want to pour into you so today the purpose for this video is so we can pick Mike's brain while we're walking through this property you can know exactly what a hard money lender is looking for and he just told you one thing what are some other things that you're observing while you're here Mike oh well I got Mike to Gary to show up so we can get inside I happen to know him for many years and so I have a lot of confidence in him okay and that's a real important and up but I start when I start with people it's a lot of times they've never done a single deal but you know I understand I'd look at a deal how to evaluate I like to get them started and I may not give them the best deal in terms of downpayment that that say I'd give Gary but almost a nothing down type situation that's because of the relationship that's my relationship we've done deals together once you give me you know work up to a level of confidence after one or two deals I know you can bring a project in I give you an angle kinds of things for you with you keeping mike is telling you around a family is getting it done getting the house done I'm gonna read Mike's brain and ask him do you want to hear an excuse if the house is not done to completion they can't be no excuses you know that clock is ticking the money's ticking that interest is ticking you know you're probably making monthly payments so you've made them already you pay them upfront maybe or you get into a deadline where you gonna have to make more money payments if you don't want it you don't want to go down that round no and that's why you got an interview and know your contract is really well you gotta know that they're going to perform you got to go look at your projects you got to get some references I know all the really good contractors are really busy and so you know make sure you just because they talk nice I probably I hope I'll find some bad contractors some of unfortunately so my bar is in Panama and it's just horrible my people that don't quite understand why should they look for when hiring a country look over here look maybe less annoyed okay how about the noise my Colombian factor on this deal for you let's go and talk about that well you know a little just the busyness of it it's not that noisy when you get off the street even you know 10 20 feet yeah once you're inside the house I don't think it's gonna bother you okay backyards probably okay you know this is a dissident neighborhood okay so it's a good place I like it so what for people that are hiring contractors Mike I mean just give them a few tips or what they should do no doubt we've seen a lot okay you know you just can't take their word that they're a good contractor they're gonna be on time so I would go and look at some of the jobs they're currently doing and talk to the people they did them for and find out did they bring it in on yeah did they bring it in on budget now they're obviously not going to give you the bad references but you still want to see that they got some good ones how many deals are they working on right now are they over they stretched you know are they trying to line you up to get to you down the road in four months when you need it done this month do they really know how to do work who are their subcontractors they gotta bring in a plumber who's that plumber and is that fun for reliable I can tell you my daughter just went through a horrible situation dealt with a very big contractor and he brought in a plumber that was absolutely worthless and caused Lehman a lien on the building he wasn't paying his suppliers you know you really have to check after some of these people that she does much bigger projects and so that probably won't happen when someone wants to do a job and they see a vision of a house fight and they come to you and they say mr. hard money lender this is a great deal we're gonna make money on it and they wants you to finance the whole thing yet what is your first what do you think well I think first time I'm looking at the numbers you know are they buying it the right price I'm gonna do a desktop evaluation see if they they're buying it right and for that neighborhood and then I'm gonna look at their rehab budget and on my head the two together and see if that makes sense you know is there profit to the end there you need to be basically at 70% of the after repair value purchase why should we have you add together 70% we're gonna wind up that's your gross profit that 25-30 percent between what you got in the project once you can be able to sell it you have to take out and that's a benefit of using us we're gonna be looking over your shoulder recognize set a second eyes be able to tell you yeah this is gonna work or no and ain't gonna work you know you don't want to go into a deal that just is not gonna work and you're comfortable saying it no oh yeah unfortunately you know we have to say no now we're gonna go about that 70% if you want to take that risk on yourself but you got to put more money down we will for people we have confidence and we will lend a hundred percent of the deal just can't walk in the door or you get up a track record maybe you can put another lender and you want to get away whatever reason so we do this make some flips that we do new construction and once we sort of get to know each other money for all kinds of oddball situations and I love those and they're just fun to try to make work we get some time maybe I'll do a little presentation with ya with you about all the oddball situations and I wanted to ask you so basically what I'm hearing you say you want the borrower to believe in their vision and their dream people come to me they said I got this deal now you want me to put up all the money and I'm like well you don't believe in yourself why would I believe me oh right right right well I believe in them and it just but they got to prove it and in the beginning warming them believing and proving it right by Gary here is an expert rehab I mean you can't believe what Gary can do to a horrible layout of the space okay he can he just has this some people have vision and skill and doing that kind of remodel work and he is a felon he can do it he can see and I can't so he's gonna show me today what he's gonna do on this project that's why we're here the rehabber right here he's ground our family Gary he's gonna rehab it and I'm gonna find it for the so anyway we're talking about impact what I had thought was getting in that here is a royal pain that's going to be really disruptive for anybody that's trying to buy the house let alone with traffic but the price point is soft enough so it will attract more people what is it bad 30 well I think I'm gonna try to get 150 okay yeah so horrible haha right so what I'm planning on doing is we use that apron there and then we're basically going through a horseshoe driveway and cut another apron in here so they can come in either way and then it'll all be concrete you know basically up you know really just be a massive concrete thing and then your grass will just be here trying to crazy plan TV so bees even have four right that's the downside to these massive street particularly when the only reason I know that is is that I almost got killed trying to get out of here and I said this is not gonna work that second I had to fix that so that's the first thing out of your fine you gotta get into their masters so yeah I feel better Artur yeah time now we're just talking about the spitting you know we're just talking about backing out you don't want to back out into this tree I'll promise you make sure we're getting all new roof all new siding windows back next week okay that was supposed all the rotten framings we'll be able to address that normal wear and tear prot only cheap this is the new keyless entry system Chris askin is now introducing to the marketplace although on your shelf soon coming to a store oh she was into bikes three bikes yeah you see how that integer goes back that way do something well I tell you what we'll talk about this and whenever I look at these analysis for me to really kind of get a better understanding how to capitalize on its potential it's to get on a drawing so I can you look over top of it and I can play with the layout down that way so I have some architectural engineering background so I usually just come in and measure up and that's when I make my discoveries so I came up pretty cool idea on this particular house so it is small was it like 972 yeah like that but the thing that struck me is this house is so small but it's this huge living room and I thought what difference would make it was missing five feet is a three-bedroom ranch okay okay but it's it's really kind of a two and a half so when I when I put it on the drawing I was able to see the opportunity so right off the bat I saw that this living room is really big so I'm gonna extend a missionary's the petition right here and go that way and create a master suite bath right window is already here so since we're tearing the siding all off I can make the window a little bit smaller more appropriate for so and here we'll open up all that bone right there make this hole yeah are you in the kitchen move that door going into kitchen right here and then make this the sink gear and so the cabinet something here and then the range and all that happens over here so big so almost at galleys in enter type the kitchen please doors come in and up yep okay well you're creating the doors are creating an opportunity to put Kappa see yes so you get more cabinets more space not in this wall out here is it this is going to be kind of you know okay what you didn't notice in that laundry room right there is that that longer what extends beyond this wall okay okay so that gave me the opportunity so right here we've got all our hair and then I got furnace all of which are junk okay they're complements you kind of see around here but this is how we hear the furnaces right so what I'm going to do is I'm going to take that furnace and put it up in the attic take a hot water heater put a good run down the line the room that gets me on this and that makes this a real bedroom and then I'm going to cut that Closet in right in here and to that depth of my room or binary code there is a sharp right there and I'm down here at renovate this bathroom could put all new furniture fixtures in there yeah I've heard of that do you take windows out of the get outta here yeah well I'm gonna take them out sometimes I will and sometimes I want to pending on when you have a shower and a a window it just adds cost so on this particular house I'll probably take that window out just put an exhaust fan in there you go simple father job let's show people who look at the video this is the set of plans so and orient you so where's this front front the MS or hand or so this is the front door where the the living room and leading into the kitchen this sort of this great room I call it right and we're over here in this bedroom he's gonna use this wall and make nice closet he over here and over here and that but he's gonna have a walk-in a bathroom so it's a master bath right like I take it find that five feet from from the man from the living room right and see I put the vanity up against the window here so I didn't have to fight it with the tongue right right I know you have a preference with the tub as opposed to a stand-up shower here sometimes I go but this price point you know usually I'll go with the tub just because it's easier right okay and you know and then here you see every look at that comp right here there and then that's where I captured that little thought oh you're not going all the way in here we're gonna go to have that right yeah because I need washer and dryer space and then also need hot water heater space so you know he spent a little time and money putting this plan together but it's really gonna help his is you know labor contractors see the vision they got a set of plans they can go by and so you know your he can do this himself but there's no reason you can't go out and hire a draftsman probably just for literally what few hundred dollars five hundred bucks maybe oh yeah would do this for you and that turns your you know gives you control over your project and it's worth doing yeah I mean definitely and then you can also do better material take off down you take it into to lose well I use like a it it's called an assembly cat so I'll still do I don't have a chief architect stuff that's right well you're articulated by background not an architect but I've I've taken classes and dragon collapses and stuff so you know I mean I'm going to type of person that was that Mark Twain used to say don't let's go interfere with your education now I took drafting I was in the engineering school picked drafting right and when I this was back before like you know you can trace - yeah yeah and I turn my projects in it looked like somebody had walked on top of them yeah I didn't do well that class and so I decided that wasn't for me well the other day AutoCAD really makes it nice because you'll discover discrepancies right away because it won't lock in in other words if you pull the outside dimension it's and then you pull the inside it all has to lock or it won't work and you'll find I've actually found hidden staircases and properties before and that changes the whole dynamics of the layout if you find three feet by 15 feet in a kitchen I mean in kitchens inches mean everything yes and that was that's their bar street progress oh no and that's okay that sounds good so you can you can just tell people you know what is - in Causton to do this this is a pretty big project cuz you're doing everything right right safely a project yes I figure my calculate about fifty bucks a square foot so it would mean close to fifty thousand for this new meaning cool a new electric all new electrical wiring I'm going in with that line I'm seeing that it's got the ground into hell that so and they've got to do two internet service I may not have to spend that much so it won't be less than thirty five bucks and usually anywhere from fifteen hours were made to a thousand it's nice no okay so now you know exactly what a hard money lender is looking for the next time you want to get a loan to buy your next house you might want to take in consideration of what Mike was talking about please subscribe to my channel round up family like the content if you'd like to share this with any other investors that are looking to get into the real estate business and comment tell me what you look for when you go to look for your next flip I know what I'm looking for I know exactly the criteria with the type of the feel that I like but I want to know what do you look for when you're considering buying your next flip it's very important to me and some of this content I can share with my audience and will this is Chris Haskins with the real estate roundup calm and I'll see you next time round up family peace [Music]

Channel: kris haskins

Views: 42,916

Keywords: real estate investor, hard money lender, hampton roads, flip houses

Id: 0C1ycwoE9aA

Length: 22min 35sec (1355 seconds)

Published: Sat May 25 2019