Tag Archives: money lender

Hard Money Lenders

Hard Money Lenders (A Primer)

Hard money lenders, are individuals with a great deal of money available for investments. Depending on your investor, some may have limited funds while others have deep pockets.

Based on their own personal criteria, they lend this money, typically on a short term basis to investors who use it for a variety of purposes, primarily buying and repairing properties in distress.

As you develop your relationships with hard moneylenders and prove to them that you treat your investments as a legitimate business, you will be able to negotiate more favorable terms. It is a good idea to learn the requirements of and develop relationships with 2-3 hard moneylenders.

Hard moneylenders will serve as a great resource as you begin your Real Estate investment business, especially if you have limited funds and/or credit blemishes. Having a good hard money lender will help you become more profitable in shorter amounts of time. You will be able to take advantage of deals and act quickly if you need to. You will also be able to refer them to potential wholesale customers in order to help them secure financing and guarantee that your deals close correctly and, more importantly, quickly.

Typical terms for hard money

The terms for a hard money loan will vary from lender to lender, will depend on the investor’s experience, the length of relationship the investor has with the lender, and depending on the lender, sometimes even the credit score of the borrower. However, if the hard money lender does look at the credit score of the borrower, he/she will typically be much more lenient because the property will serve as the collateral

Loan to Value (LTV), Interest, and Points

Generally speaking, a hard money lender will lend between 50%-75% of the after-repaired value of a home with interest rates ranging from 12-18% for anywhere between 6 months to 5 years. In addition, they will charge between 1-10 points as an upfront financing fee.

Payment Schedule

Some lenders will charge interest while some will amortize the loans, though more often than not, for the short term loans, it is easier accounting for the lender to collect interest only payments.

Repair Money

Some lenders will lend repair money and others will not. Many times, this will ultimately depend on the LTV of the property. If you do find a lender that agrees to lend for repairs, frequently the money will be kept in an escrow account from which you draw as the work is completed. In rare instances, or after you have established a level of trust with the lender, he/she may allow you to leave the closing table with the funds

Closing Costs

Provided your Loan to Value (LTV) is within the lender’s requirements, you can often negotiate the closing costs to be wrapped into the loan.

Lending Criteria for Hard Money Lenders

Just as terms vary from lender to lender, so do the criteria. Each lender has his/her own preference with regard to areas in which they will lend and types of investors to whom they will lend.

As you begin to build your list of hard moneylenders, it is important to ask them what their criteria are:

• What is the typical Loan to Value you will lend on?

• Where do you find your comparable sales?

• Do you check credit? (If so, can I provide you with a recent copy of my report?)

• Do you require appraisals?

• Do you charge an inspection fee?

• Are there certain areas that you do not lend?

Property Value vs. Credit

Generally speaking, most hard moneylenders are more concerned with the property value than the credit of the investor. They simply want to know that if the investor defaults, they will take ownership of a piece of property from which they can recover their investment and possibly turn a profit themselves. Basically, the lender wants to feel secure in his/her investment.

Finding Hard Money Lenders

Hard money lenders are, in most cases, private individuals. They are not institutional lenders that must abide by a strict set of rules and guidelines.

This means that they can be extremely flexible, but also very tough at the same time.

More than likely, your local investor club will have several hard moneylenders advertising at each of the meetings. These are great places to meet these individuals, network, and build relationships.

In addition to your local investment clubs, you can find these types of funds in many different places. These lenders can be your doctors, attorneys, friends and even your neighbors. The better the relationship you have with the individual, the more favorable the rates and terms will be.

Try the following question, which we learned to ask from a friend and mentor:

“I know this isn’t for you, but do you happen to know anyone that might be interested in earning 12-15% return on their money secured by a first lien in Real Estate?”

You would be surprised at how often the very person that you are asking says “Yes, I am interested.” You are not asking directly, so the person does not feel threatened. In fact, he/she may even be more inclined to lend you money since you were not asking directly.

Real Estate Outsourcing: Is This Why You're Not Successful?

Last week, I was on a coaching call with one of our students… and the light bulb went off in my head. It was that “ah ha” moment. I finally really understood one of the 3 main reasons people are not successful in real estate: Not Taking Action. Truth is, it’s a huge cause for failure in lots of ‘biz opp’ strategies.

It’s what I’ve since defined as the “outsourcing virus”.

This student wanted to know what he could do to get money coming in NOW.

Here’s what got me thinking… and why so many people are struggling in their businesses.

The student I was talking to had invested tens of thousands of dollars in real estate courses, seminars, and systems. Yet, he was still struggling. (Do you know anyone like that?) Continue reading

What Are You Thankful For?

It’s easy to get caught up in the “stuff” of day to day life. It’s easy to get overwhelmed, fed up, frustrated and scared from time to time. But every now and then, it’s great to stop yourself and think about what you are thankful for in life.

I remember – it must have been 10 years ago now – I got a journal-type book from Barnes and Noble and began to use Oprah’s idea of “The Gratitude Journal” and every single day, I would force myself to come up with 5 things that I was thankful for. It sounds easy enough, but after about day 5, you run out of the obvious. You start REALLY digging deep for things that you are thankful for.

But beyond that, something happened internally! I began to really BE thankful for everything and I stopped taking things for granted. I started looking at all the people that were important in my life and rather than going from generic statements like, “I’m thankful for my mother,” I started getting specific. “I am thankful for the encouragement my mother gave me to get started in real estate”. That’s when I really began to appreciate everything on a deeper level.

So… in the spirit of Thanksgiving, I encourage you to post your comments to this post and write 5 things that you are thankful for in your life. Then… share them with the people that you are thankful for when you’re sitting around the table with family and friends! Continue reading

Hard Money Loans: How to Get the Best Rates

Whether you’re a seasoned real estate investor or brand new to investing, you will – at some point in your career – need to turn to hard money!

Many people turned away from hard money except on the REALLY UGLY properties for much of the early 2000s or if they had pretty beat up credit. This was because conventional lenders were giving money away for all intents and purposes! Virtually anyone ““ first time home buyer to seasoned investor ““ could get 100% financing on their properties and it didn’t seem to matter how many properties one had!

Well”… welcome to the new market: The “conventional” lenders (like Chase, Indymac, Countrywide, etc.) have tightened their reins, and for good reason!

Before we go into how to get hard money, let’s talk about some of the pros and cons of hard money versus conventional financing! Continue reading

Real Estate Investing Tips: 5 Key Components

Real Estate Investing is simple, but not necessarily easy!

This past weekend, I attended one of the biggest Internet Marketing seminars in the world. I could go on and on and on with ideas that I had that apply to real estate… like how to use video on your real estate sites, processes that can streamline the lead generation, and on and on and on… (I’ll be sharing some of these new ideas with you over the next few weeks)

But, I want to share with you a conversation that I had with a friend, mentor and a brilliant marketer who happened to be teaching how to use audio and video on your websites… I told him that I recommended his program to several people because he makes it SO easy… Then, he said something interesting to me that made me think.

He said, “Heather… it really is simple. You see, people can complicate anything! It’s like telling someone how to drive a car. It’s not complicated at all. Just open the door. Sit down. Turn the car on and put it into drive. But, people always make things harder than they need to be… They start asking thinks like ‘which door should I open – the left or the right?’ or ‘Do I unlock it with a key or click the button’ and on and on we go. Twenty minutes later, we’ve still not even been able to get into the car.

I liked that analogy because it applies to real estate. There are really 5 things you need to know – or steps – when it comes to real estate.

Here are the 5 Real Estate Investing Tips you need to know! Continue reading