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100% Financing for a Property Purchase with Private Hard Money - YouTube

Channel: Private Lender Link

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are you seeking 100 financing for real

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estate investment purchase and finding

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that it's not

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easy to find a lender for your deal in

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this video i'm going to explain the

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requirements for getting the highest

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possible leverage

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the maximum loan to value and how to

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find private mortgage lenders that can

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fund your property purchase

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i'm rocky botani ceo

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privatelenderlink.com where investors

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and brokers find direct

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private hard money lending companies if

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you're in the investment real estate

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business and want to gain insights into

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private mortgage lending

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subscribe to our channel and get

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notified every time we release a new

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video

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100 financing is mostly used for real

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estate deals in which the property will

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be improved immediately after the

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purchase

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so that its value will increase before

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the end of the loan term

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however that's not what this video is

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about in this video we'll focus on a

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standard bridge loan for purchasing a

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property that does not require

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a renovation budget i created a separate

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video to cover 100

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financing for house flipping and another

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video for multifamily value-add deals

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now before we get started i have to

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clarify that private lending is

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only for investment real estate it's not

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for buying a home that you're planning

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to live in

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there is one exception in california and

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i'll make a separate video about

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that another item to clarify is the type

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of lender

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when i say private lender i'm referring

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to professional

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private lending companies also known as

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hard money lenders or bridge lenders

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i'm not referring to private individual

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investors

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who lend out their own retirement funds

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hardly any private lending companies in

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the united states will consider 100

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financing because it is extremely risky

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if you don't put any money into a deal

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you have nothing to lose and therefore

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you may be more inclined to walk away

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from a property

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if things don't work out as planned

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contrary to what many people think about

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private lenders

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professional private lending companies

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do not want to foreclose and take back

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the property

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the foreclosure process is an absolute

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nightmare for lenders and

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is likely to result in a net loss for

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them so their thinking is if you put

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down your own hard-earned cash into a

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deal

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you're more likely to pay back the loan

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professional lenders want you to succeed

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so that you can do more deals and come

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back to them for financing those deals

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in the future

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so what is the maximum loan to value the

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max ltv

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for most short-term private mortgages is

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and a small number of lenders will go up

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to 75

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if you're buying vacant land the maximum

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is 50 percent loan to value

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anything higher than that just doesn't

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make sense for a private lender

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the only way to get 100 financing for

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the purchase of an investment property

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which will not be significantly improved

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during the loan term

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is with cross collateralization this

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means you need to have another

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investment property with a sufficient

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amount of equity to use instead of cash

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so the lender would have a first

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position mortgage on the property being

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purchased

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plus a first or second mortgage on the

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property you

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already own if the cross property is

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owned free and clear

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meaning it doesn't have an existing

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mortgage you can use up to 70 percent of

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that property's value for the purchase

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transaction

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not all private lenders offer this and

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it may take a bit longer to close

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because the lender now has to do

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their due diligence on a second property

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not many lenders will consider a second

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position mortgage but

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the ones that do will likely have higher

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pricing for it

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if the cross property is in first

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position the pricing would likely be the

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same as if you brought

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cash to the closing the interest rates

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for most first position private

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mortgages range from 7

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to twelve percent with the average being

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around nine percent nationally

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for a second mortgage the interest rates

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typically range from ten percent

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to fifteen percent you may feel that

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this method of crossing another property

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being called one hundred percent

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financing is a bit deceiving

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however this is how some lenders

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advertise that they offer 100

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financing for a purchase bridge loan and

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what they really mean

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is you can buy a property without a cash

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down payment

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one other way to get higher leverage and

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purchase bridge loans

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is with a seller carryback this means

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the seller

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would provide a second mortgage to fill

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the gap between

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the private lender's maximum ltv and the

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purchase price

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while some private lenders are okay with

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this they won't consider it when the

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borrower is not putting any of their own

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cash into the deal

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so if a lender is willing to fund up to

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70 percent of the purchase price

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they may be okay with you putting 10

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down and the seller can finance the

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remaining 20

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with a second mortgage for residential

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property purchase it will be nearly

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impossible to find a private lender

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willing to fund a second mortgage for a

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purchase

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this is also known as gaap funding i've

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known some companies that offered this

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in the past

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but they went out of business or they

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had to change their business model

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because it resulted in way too many

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foreclosures

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in commercial real estate financing

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there are some private lenders that

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offer

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second mortgages for a purchase and they

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call it mezzanine financing

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or preferred equity the minimum loan

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amount is typically 1 million dollars

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and the property investor will need to

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contribute

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10 to 15 of the purchase price in cash

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what if you're getting a great deal off

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market and buying way below the real

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value

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most private lenders will not take this

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into consideration

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in private mortgage lending the purchase

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price is the value

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if you try to argue this with a private

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lender the response will likely be that

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if they can

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fund 100 of the purchase price they can

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just buy the property for themselves and

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be a real estate investor

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instead of a lender i see a lot of real

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estate investors using the perceived

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value amount when they state the loan to

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value to lender but if you're buying a

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property and not adding any value to it

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during the loan term

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a private lender will primarily focus on

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the purchase price

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and many use the acronym ltp which is

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short for loan to purchase price

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if you're looking for a private or hard

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money lender use our website

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privatelenderlink.com as a resource

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there's no fee to search and no

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registration required

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many lender profiles will indicate

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whether the lender will

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cross-collateralize and if they allow a

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second mortgage behind their loan

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i'll show you how to find these filters

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when you select the loan type

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there are four categories which include

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lenders that provide purchase bridge

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loans

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private money hard money commercial

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bridge

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and residential bridge private money and

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hard money have a mix of residential

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and commercial property lenders most of

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the lenders in the commercial bridge

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