WHAT IS HARD MONEY?

HARD MONEY IS AN ASSET-BASED LOAN

which typically comes with a short maturity, as well as a higher interest rate and fee.

Hard money is an excellent real estate tool, as long as you understand how to take advantage of what it offers in order to profit from it. Hard money loans can be used for acquisition financing, acquisition and renovation financing, or renovation financing and can vary depending on each unique situation.

Check out Scott Lurie, president of Milwaukee Hard Money, explain how hard money works and how you can make it work for you.

HARD MONEY IS AN
ASSET-BASED LOAN

which typically comes with a short maturity, as well as a higher interest rate and fee.

Check out Scott Lurie, president of Milwaukee Hard Money, explain how hard money works and how you can make it work for you.

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11-Step Checklist

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LENDING SCENARIOS

Fix and flip through conventional financing typically doesn’t work, because it often takes too long to close with a bank or the bank won’t finance the distressed asset. When sellers are looking to get rid of a property, cash is always king, and hard money lending can provide you with the assets needed to acquire the property within days.

Milwaukee Hard Money can help you leverage multiple transactions, while conserving your cash flow. We finance based on the After Repair Value (ARV), up to 65%, which allows for additional leverage. Take a look as compare conventional financing vs. hard money lending through Milwaukee Hard Money.

Value (ARV):

$200,000

Type:

4 Bed 2 Bath 2 Car Garage

Purchase Price:

$100,000

Repairs Needed:

$25,000

Bank Financing

Purchase Price
$100K

With conventional financing, you would be required to go through a typical lending approval period, which can be anywhere from 30-45 days on average, and that’s if the bank will even approve the loan based on the condition of the distressed asset.

 


 

Down Payment: $25,000

Repairs (out of pocket, lender will not finance): $25,000

Total Loan: $75,000

Total Cash Needed: $50,000

Interest Rate (estimated): 5%

Term: 3 Years (with Pre-Payment Penalty)

 


 

Conclusion: This is the most cash and time-intensive option, as it assumes the investor has $50,000 available, as well as the ability to wait for a traditional closing period.

Milwaukee Hard Money

Purchase Price
$100K

By utilizing Milwaukee Hard Money, you have an opportunity to drastically reduce your upfront cash requirements, while also closing quicker on the property with cash payments – often within days of contacting us.

 


 

Down Payment: $10,000

Repairs: $25,000 (100% Financed)

Total Loan: $115,000

Total Cash Needed: $10,000 (Plus Fees)

Interest Rate: 15%

Term: 6 Months

 


 

Conclusion: By leveraging hard money lending, investors have the opportunity to more effectively manage their cash flow, as well as move quicker on asset purchasing, while improving their wealth accumulation opportunities with the potential to manage multiple projects at any given time.

Acquiring rental properties provides for an opportunity to earn great cash flow, residual income, and wealth accumulation. This opportunity is increased when an investor is able to source a distressed asset in need of repairs and improvements, which are the result of previously neglected properties, foreclosed assets, fire damaged assets, estate assets and other similar scenarios.

So the question becomes, what is the best way to finance these purchases to maximize your returns? We’ll look at some conventional and unconventional methods for financing and how you can make them work for you. If you want to discuss a possible transaction in greater detail, please do not hesitate to submit an application or contact us directly.

Value (ARV):

$200,000

Type:

4 Family
2 Bed 1 Bath (4 Units)

Purchase Price:

$100,000

Repairs Needed:

$50,000

Bank Financing

Purchase Price
$100K

This is the most cash-intensive option, which provides maximum returns without optimizing leverage. However, this assumes that you have $75,000 on-hand, to satisfy the bank loan and repair requirements as outlined below:

 


 

Down Payment: $25,000

Repairs (out of pocket, lender will not finance): $50,000

Total Loan: $75,000

Total Cash Needed: $75,000

Interest Rate (estimated): 5%

Amortization: 25 Years

Term: 5 Years (with Pre-Payment Penalty)

Ownership: 100%

 


 

Conclusion: Requires $75,000 in cash, Ownership is 100%, and your Leverage is limited to your current bank debt and pre-payment penalty.

Partnership

Purchase Price
$100K

This option requires knowing and trusting other investors with available cash, as well as limiting ownership to 50% or less, depending on agreement.

 


 

Down Payment: $100,000 (Purchase Price)

Repairs (out of pocket, no lender to cover): $50,000

Total Costs: $150,000

Total Cash Needed (Per Investor): $75,000

Ownership: 50%

 


 

Conclusion: Requires $150,000 in cash, Ownership is split among the investors, while your Leverage is limited until cash investments are recovered through rental fees.

Milwaukee Hard Money

Purchase Price
$100K

This option provides investors with the most leverage and minimal up-front cash, as well as 100% ownership. Most importantly, after successfully stabilizing your asset, a bank will refinance you based on the ARV ($200,000), which then provides you with 100% leverage on your investment.

 


 

Down Payment: $10,000 (10% of Loan Value)

Total Loan: $140,000 (Total Loan plus Repair Costs minus Down Payment)

Total Cash Needed: $10,000

Term: 6 Months

Ownership: 100%

 


 

Conclusion: Requires $10,000 in cash (plus fees), Ownership is 100%, and your Leverage would be entirely maximized once the property is updated and refinanced with a bank loan based on ARV.

With Wholetailing, investors have found an opportunity to capitalize on a below market-value purchase price for an asset, with the intent to perform minimal updates or changes before selling the property for a profit.

In most instances, ownership of these assets is intended for a short period of time, with a quick purchase and sale timeframe desired by most investors. Utilizing hard money lending provides our clients with the cash they need to, often within days of submitting request, to quickly acquire the property and to help leverage multiple transactions, while conserving your cash flow. We finance based on the After Repair Value (ARV), up to 65%, which allows for additional leverage. Take a look as we compare conventional financing vs. hard money lending through Milwaukee Hard Money.

Value (ARV):

$140,000

Type:

4 Bed 2 Bath 2 Car Garage

Purchase Price:

$100,000

Repairs Needed:

$5,000

Bank Financing

Purchase Price
$100K

With conventional financing, you would be required to go through a typical lending approval period, which can be anywhere from 30-45 days on average, and that’s if the bank will even approve the loan based on the condition of the distressed asset.

 


 

Down Payment: $25,000

Repairs (out of pocket, lender will not finance): $5,000

Total Loan: $75,000

Total Cash Needed: $30,000

Interest Rate (estimated): 5%

Term: 3 Years (with Pre-Payment Penalty)

 


 

Conclusion: This is the most cash and time-intensive option, as it assumes the investor has $30,000 available, as well as the ability to wait for a traditional closing period.

Milwaukee Hard Money

Purchase Price
$100K

By utilizing Milwaukee Hard Money, you have an opportunity to drastically reduce your upfront cash requirements, while also closing quicker on the property with cash payments – often within days of contacting us.

 


 

Down Payment: $9,100 (Total loan amount not to exceed 65% of Total ARV)

Repairs: $5,000 (100% Financed)

Total Loan: $95,900

Total Cash Needed: $14,100 (Plus Fees)

Interest Rate: 15%

Term: 6 Months

 


 

Conclusion: By leveraging hard money lending, investors have the opportunity to more effectively manage their cash flow, as well as move quicker on asset purchasing, while improving their wealth accumulation opportunities with the potential to manage multiple projects at any given time.

MEET OUR TEAM

Scott Lurie

Scott Lurie is a Milwaukee Businessman who earned his B.A. in Finance from George Washington University in Washington D.C. In 2004, he began investing in real estate and is currently involved in real estate acquisitions, financing, and property management. In addition to real estate, Scott also specializes in hard money financing. As President of Milwaukee Hard Money, Scott has been the driving force behind financing properties in and surrounding the Milwaukee area, and has generated over $50 million in financed deals. His investment groups also own a number of restaurants, as well as a brewery in Milwaukee, and a national organic food company in Virginia.

Scott Lurie

PRESIDENT
Sarah Floyd

Sarah has nearly 10 years of experience in real estate sales and investments and holds a Bachelor’s Degree in Interior Design. With her vision and investment network, she assists many investors with acquisition and financing from residential rehab projects, to commercial and multi-family units. Sarah joined Milwaukee Hard Money in 2013 and has been integral to the continued success and expansion of our business. She works directly with each and every one of our borrowers and assists with the lending process from start to finish.

Sarah Floyd

VICE PRESIDENT
Michelle Ayala

Michelle joined Milwaukee Hard Money in January and is a highly-skilled accounting professional with nearly 15 years of experience. She manages all of our day-to-day financing activities, as well as our client relations initiatives with each of our partners, and ensures all our books balance out at the end of the day.

Michelle Ayala

SENIOR ACCOUNTANT
Mike Doney

Mike has over 10 years experience in Marketing and has used his passion for technology and design to help further expand Milwaukee Hard Money’s market strategy and brand awareness. Since joining in 2017, he has helped to redesign and revitalize our brand, creating a more user-friendly experience for our partners.

Mike Doney

DIRECTOR, MARKETING & CREATIVE
Nick Kudrys

Nick is the newest member of our team and currently helps to manage our day-to-day digital marketing and communication efforts. With a Bachelor’s Degree from Western Illinois University and over 5 years experience, he’s helping to quickly build our online presence.

Nick Kudrys

SEARCH & SOCIAL MARKETING SPECIALIST
Tania Nigh

Tania has worked directly with Scott for nearly 2 years, helping to manage and facilitate all of the day-to-day tasks required to run Milwaukee Hard Money. With a Bachelor’s Degree in Business and Spanish from UW-Milwaukee, Tania has helped significantly to drive further expansion of our services.

Tania Nigh

EXECUTIVE ASSISTANT

FREQUENTLY ASKED QUESTIONS

What exactly is a hard money loan?

A hard money loan is a short-term, asset-based loan that provides funding for acquisition and repairs on investment properties. These loans are funded by private individuals, like the investors behind Milwaukee Hard Money. Requirements vary by lender, however, most private hard money lenders are more concerned with collateral and equity protection, than borrower credit scores.

How does a hard money loan compare to a conventional loan for the investor?

A hard money loan is generally based on the after-repair value (ARV) of the asset, in contrast to a conventional loan, which is typically based on the actual value (AV) of the asset which is the value of the asset “as is” at the time the loan is made. The ARV is calculated based on the value of the real estate asset after the estimated repairs are made on the property. Typically hard money loans are meant to be a quick turn-around or after-repair situations. Rates are typically higher than conventional financing, however, funding times are usually much faster and the loan criteria and repayment terms can be tailored to the individual situation. Conventional financing is best used for your traditional rentals and long-term hold scenarios. Many investors use hard money as way to secure the property in a short period of time, then refinance into conventional financing.

What are the advantages of using a hard money loan?

This type of loan allows for a simple qualification process, a more competitive offer, quicker closing, enablement of multiple purchases, and leverages your buying power to name a few.

What qualifies me for a hard money loan?

The main criteria for qualification is the evaluation of the property, repairs, and the ARV using comparable sales data. We make sure the borrower has cash upfront for closing costs and fees, but also cash reserves and/or collateral to support monthly interest payments and possible refinance costs. We don’t focus on your credit score or other documents typically requested by a conventional lender.

What and where does Milwaukee Hard Money loan?

Real estate non-owner-occupied property only (residential or commercial), based locally in Milwaukee County or the surrounding area. We prefer to lend locally, to help support the local investment community and neighborhood revitalization efforts.

Can I get money to pay for repairs?

We loan money for the purchase, the repair costs, or both. We can include repair costs with the acquisition, as long as the loan-to-value (LTV) of the after-repair value (ARV) does not exceed 65%. If you’re simply looking for repair cost money, we require a minimum loan amount of $25,000. We do require a “Draw Request” form to be filled out to identify the completed repairs to the property, along with copies of the invoices from the contractors. After work is inspected, draws can be dispersed. Typically, repair work is not paid in advanced.

How long of period is the loan?

We typically write the notes for 6 months. Longer term notes are available, but can lead to increased costs or interest rate.

Do I need to put any money down?

Yes. You will need money upfront for closing costs and origination fees. You will also need cash reserves for monthly interest payments and possible refinance fees, in case you need to extend the loan beyond 6 months. On some occasions, deals require a minimal down payment.

What are typical costs associated with Milwaukee Hard Money?

There is no standard rate, since each deal is unique. We price each deal based on the individual needs of our clients. However, costs do include closing costs (approx. $2,000), an origination fee (5-10% of purchase price), and monthly interest-only payments (15-18% interest only).

Do you charge a pre-payment penalty?

Absolutely not. Our clients are free to pay-off the loan at any time within the loan period, without incurring any additional charges or fees.

How quickly can Milwaukee Hard Money close and fund the transaction?

Typically, it takes 5-10 days for us to fund a loan, compared to typical bank funding times of 4-8 weeks. We are able to fund much faster because our loans are funded directly by our company, with minimal paperwork. Once we have the title commitment, we can usually close in 3 days or less.

I have a property under contract and need to close quickly. What do I do next?

Call our office at (414) 269-5300 as soon as possible and send us your contract and repair estimate(s).

What exactly is a hard money loan?

A hard money loan is a short-term, asset-based loan that provides funding for acquisition and repairs on investment properties. These loans are funded by private individuals, like the investors behind Milwaukee Hard Money. Requirements vary by lender, however, most private hard money lenders are more concerned with collateral and equity protection, than borrower credit scores.

How does a hard money loan compare to a conventional loan for the investor?

A hard money loan is generally based on the after-repair value (ARV) of the asset, in contrast to a conventional loan, which is typically based on the actual value (AV) of the asset which is the value of the asset “as is” at the time the loan is made. The ARV is calculated based on the value of the real estate asset after the estimated repairs are made on the property. Typically hard money loans are meant to be a quick turn-around or after-repair situations. Rates are typically higher than conventional financing, however, funding times are usually much faster and the loan criteria and repayment terms can be tailored to the individual situation. Conventional financing is best used for your traditional rentals and long-term hold scenarios. Many investors use hard money as way to secure the property in a short period of time, then refinance into conventional financing.

What are the advantages of using a hard money loan?

This type of loan allows for a simple qualification process, a more competitive offer, quicker closing, enablement of multiple purchases, and leverages your buying power to name a few.

What qualifies me for a hard money loan?

The main criteria for qualification is the evaluation of the property, repairs, and the ARV using comparable sales data. We make sure the borrower has cash upfront for closing costs and fees, but also cash reserves and/or collateral to support monthly interest payments and possible refinance costs. We don’t focus on your credit score or other documents typically requested by a conventional lender.

What and where does Milwaukee Hard Money loan?

Real estate non-owner-occupied property only (residential or commercial), based locally in Milwaukee County or the surrounding area. We prefer to lend locally, to help support the local investment community and neighborhood revitalization efforts.

Can I get money to pay for repairs?

We loan money for the purchase, the repair costs, or both. We can include repair costs with the acquisition, as long as the loan-to-value (LTV) of the after-repair value (ARV) does not exceed 65%. If you’re simply looking for repair cost money, we require a minimum loan amount of $25,000. We do require a “Draw Request” form to be filled out to identify the completed repairs to the property, along with copies of the invoices from the contractors. After work is inspected, draws can be dispersed. Typically, repair work is not paid in advanced.

How long of period is the loan?

We typically write the notes for 6 months. Longer term notes are available, but can lead to increased costs or interest rate.

Do I need to put any money down?

Yes. You will need money upfront for closing costs and origination fees. You will also need cash reserves for monthly interest payments and possible refinance fees, in case you need to extend the loan beyond 6 months. On some occasions, deals require a minimal down payment.

What are typical costs associated with Milwaukee Hard Money?

There is no standard rate, since each deal is unique. We price each deal based on the individual needs of our clients. However, costs do include closing costs (approx. $2,000), an origination fee (5-10% of purchase price), and monthly interest-only payments (15-18% interest only).

Do you charge a pre-payment penalty?

Absolutely not. Our clients are free to pay-off the loan at any time within the loan period, without incurring any additional charges or fees.

How quickly can Milwaukee Hard Money close and fund the transaction?

Typically, it takes 5-10 days for us to fund a loan, compared to typical bank funding times of 4-8 weeks. We are able to fund much faster because our loans are funded directly by our company, with minimal paperwork. Once we have the title commitment, we can usually close in 3 days or less.

I have a property under contract and need to close quickly. What do I do next?

Call our office at (414) 269-5300 as soon as possible and send us your contract and repair estimate(s).

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Monthly Newsletter

MILWAUKEE HARD MONEY
5601 W NORTH AVE
MILWAUKEE, WI 53208

(414) 269-5300
info@milwaukeehardmoney.com

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