OfflineHard Money for Creative Real Estate Investors
3 Components of a Hard Money Loan
1. Must be based on the Property – The loan is made based on the deal that you bring to the table for financing…NOT your credit score. Loans are usually around 65 to 70% of the after repaired value (ARV).
2. Short Term – Loans range from 3 to 12 months.
3. High Interest – Expect to pay 12% to more than 18% depending on who you use plus points.
Why Investors Use Hard Money
Why would anybody want a loan that they have to cash out quickly that seems like it costs an arm and a leg? I’ll tell you why! Maybe you have a deal under contract that you NEED to close a week from today. Try going to Bank of America on that one. Maybe your credit sucks.
Maybe you are buying a house that is in such bad condition, traditional banks won’t finance it. Maybe you plan on buying a house, renovating it, and selling it within a matter of months.
Maybe you already have a number of houses on your credit report and the banks won’t lend you any more money. These are all good reasons to bring in a hard money loan to finance a deal among others.
When you break it down, I don’t think that hard money is that expensive. It’s a cost of doing the deal. If you have ever bought a house conventionally, you have seen all the closing costs associated with buying the property.
By the time everybody gets paid that had a hand in the financing process, you’ve shelled out at least a few grand. And how much is it going to cost you if you don’t get a good deal financed?
Who isn’t a Hard Money Lender
There are people that claim to be hard money lenders but when it comes down to it, they want you to jump through every hoop and hurdle banks do. These people aren’t hard money lenders at all. Hard money lenders loan 65% to 70% of ARV, (after rehab value).
Don’t work with a lender that loans on the purchase price, always work with one that loans on the ARV. They typically will require an appraisal, a CL-100, and certification that the heating and air conditioning is in working order.
There are hard money lenders in every community looking for good deals to fund. They know that worst case scenario equals getting a property back and making all the profit the investor should have made.
Even if you don’t plan on using one, get out there and find a hard money lender to add to your team. It could mean the difference between getting a deal done and watching someone else make all the money! The choice is yours.
If you would like the chance to work with me or one of my fellow real estate investor coaches and our advanced training programs, give us a call anytime to see if Dean's Real Estate Success Academy and our customized curriculum is a fit for you. Call us at 1-877-219-1474 ext. 125
You have described each situation I am currently in (except bad credit). This was the final little push I needed to find myself a HML.
Thanks for posting the important extras.
Rina
P.S. I've enjoyed listening to your ITS segments.
"Obstacles can slow you down, but they can only stop you with your permission." Dean Graziosi (BARM pg 101)
"For I know the plans I have for you," declares the Lord, "plans to prosper you and not to harm you, plans to give you hope and a future." Jeremiah 29:11
For a little about me, welcome to the site, and a few tips for new DG family members, click on this link: http://www.deangraziosi.com/user/3249
Wow, that's great input.So My question is how &where to find local HML's
It's so great working with your program, & I'm excited to be able to share, thx, Michael
I think this is valuable information for many of the folks on here as well as myself. I get asked all the time how do you fund deals? I have NO credit and NO money? How can I do this? I never mention HML's to new investors because most of them think the interest rate is too high and don't see the big picture. Thanks for posting this it breaks it down, makes it easy to understand and shows the benefits of using them. Great post!!
God bless you,
Psalms 118:23 "This is the LORD's doing; it is marvelous in our eyes."
I've searched googles and I saw the website, www.reiclub.com, they have a list of hard money lenders.
Welcome to the DG family we are so happy to have you here!
Thanks for sharing that with us... Great contribution to the forum, we appreciate it very much!! Keep up the good work.
God bless you,
Psalms 118:23 "This is the LORD's doing; it is marvelous in our eyes."
I am looking to bid on a house where the opening bid is $10,000. The house should sell for at least $120,000 and does not look like it needs much in way of repairs (will know more later). I am going to borrow the money to put down at the acution and use an HML to get 65 to 70% of the ARV. Since it will be a flip, the higher percentage rate will not have that much of an effect on our ROI. Besides, I don't really think I could get this done through bank without giving up my first born. Oh, wait, my first born no longer qualifies as a tax deduction, hmmm....
Roni
That's a great example!! It also gives me a good idea how to put my twins to good use... LOL! Just kidding!!! Keep us posted on this one, I'd like to know the outcome.
Psalms 118:23 "This is the LORD's doing; it is marvelous in our eyes."
Good luck at the auction. Wouldn't that be great if you are pleasantly surprised and get it for much cheaper? Should be fun, either way. Let us know how it works out. And your experience with the HML. (Wish you had a journal started. You've got a lot of great stuff goin' on.
)
Best wishes,
Rina
"Obstacles can slow you down, but they can only stop you with your permission." Dean Graziosi (BARM pg 101)
"For I know the plans I have for you," declares the Lord, "plans to prosper you and not to harm you, plans to give you hope and a future." Jeremiah 29:11
For a little about me, welcome to the site, and a few tips for new DG family members, click on this link: http://www.deangraziosi.com/user/3249
anybodys parade or anything but, Cfuller mensioned that HARD MONEY LENDERS, lend based on your DEAL, NOT your credit score, well, i found that this isn't exactly TRUE, quite a few HARD MONEY LENDERS, REQUIRE a minimum credit score, i think the one lender said like 640 and another was 660, so, don't be too surprised when you DON'T QUALIFY, cause you don't meet thier lending criteria, your probably going to have to shop around to find one that DOSEN'T care, "i know i did", YOUR HERO, SULLY.
YOUR HERO, SULLY
So true, I spent the afternoon checking out the site!! look like it will do great things in the future, but not for startups like myself, thx sully !! *Winks*, Michael
It's so great working with your program, & I'm excited to be able to share, thx, Michael
Man, Sully, you didn't just rain on my parade, you hit me with a typhoon!.
Not having an HML check my credit report was, what I thought, one of the perks of using them. Every time they have to pull a report on me it will put a ding on my credit report. I figured the private money lenders would check my credit, but I didn't think they did for hard money loans.
Rina, I'll let you know how things work out at the auction. Open house is next Sunday and the auction is Tuesday. The minimum bid is $10,000 so I don't think they'll start any lower. They have several coming up in your state if I'm not mistaken.
For anyone interested, here is the site that I found my auction property on.
http://www.dealmakerscafe.com/index.php?option=com_content&task=view&id=...
It has a list of several auction houses in different parts of the US (and then some). I think I acutally found the ONE auction in my whole entire state with the auction house you use Rina.
Elena, you crack me up!
I'm going to get off here for now so I can surf the net to find an HML that will lend money without checking my credit score. If Sully and Michael say it can't be done, I just gotta prove them wrong. (big hugs guys, just kidding)
Roni
Ok, guys, check these sites out:
http://www.hardmoneysourcing.com/
They say they can lend without a FICO score for rehabs but they use stated income, stated assets.
http://www.a10capital.com/
This company claims to be an asset based company which implies they don't check scores, but couldn't find anything in writing. (commercial lender)
http://www.galaresources.com/
This site offers several different types of loans and I couldn't see where they say they need any documentation so you may want to check them out. I'll do more research tomorrow. But try these out in the meantime. I know the first reference specifically stated they do no credit check but do require stated income/assets
http://www.equitydevelopmentcorp.com/listings.php
While I was looking for HML's I came across this site that has listings they offer for sale (HML REO'S)? They have quite a few pages of what seem to be good deals in several states. Man, I am so ADD!
Good luck guys!
Roni
Good research and good info!
lol (I wonder if any HMLs show up at these to make connections? Hmmmm)
One nice thing about regular auctions (which I see increasing numbers of here, too) versus sheriff's sales (auctions) is that they DO have open houses for you to view the property. You actually have plenty of time to come in with an inspector. And also,(at the ones I've been to) they have info sheets that list everything about the property, including disclosures on any problem areas. You get to make a pretty informed decision. The only big variable is WHO shows up the day of, and your self-control on sticking with your limit.
Roni, you will enjoy the experience one way or the other. And hopefully you'll walk away the winner.
Best wishes,
Rina
P.S. The HML REOs sound VERY interesting!
"Obstacles can slow you down, but they can only stop you with your permission." Dean Graziosi (BARM pg 101)
"For I know the plans I have for you," declares the Lord, "plans to prosper you and not to harm you, plans to give you hope and a future." Jeremiah 29:11
For a little about me, welcome to the site, and a few tips for new DG family members, click on this link: http://www.deangraziosi.com/user/3249
Would you use a HML to purchase rental property? If so how would you handle it when your loan expires? Any ideas?
Todd H. Brown
Cajun Investments LLC.
HML's are generally used for short term properties, ie. flips. I might use one for a rental if I could get the property at a real bargin and needed the money quick or I knew it was a good deal and had no other financing options. However, if you use HML's for rental properties you will be paying all their fees, a high interest rate, and then the bank/broker fees once you refinance.
Did you have something particular in mind?
Roni
I went thru a company called America One Funding Group which lent me $25,000 over a 96 month period at 10.25%, which I'll use for down payment cash and renovations. I kept googling websites and filling out applications. They are out there for short term cash. If they tell you 'no' go on to the next. Good Luck in your search.
Bruce
Glad to see you worked through those obstacles and came out on top!! Great sites for HML's I will check them out. Just keep finding ways around those obstacles and you will be where you need to be in no time at all... Millionaire's Lane!!
Keep up the great posts, I love this stuff!!
Continued blessings and success everyone,
Psalms 118:23 "This is the LORD's doing; it is marvelous in our eyes."
Sorry it took so long to reply. I am almost at my personal house buying limit. I have my home and 2 rentals on my name. The bank told me I can do 1 more and that's why I'm looking at other options for funds.
Thanks for the info.
Todd H. Brown
Cajun Investments LLC.
i tried american one they they told me they werent giving out loans at the moment something about a diffrent platform
michael scott sondgeroth
150% determined believe!!! successful most of all have fun!!!!!!!!!
BE A DO,ER NOT A TALKER!!!!!!!!
Do you have a realtor you're working with? Ask him to recommend HMLs to you. They would know some in your area. Al told me of one here I'm calling tomorrow.
Psalms 118:23 "This is the LORD's doing; it is marvelous in our eyes."
All of the ones we have looked into check scores and go according to purchase price. Does anyone have a HML for the mid states? I believe the one we contacted was Equity Max out of Florida. We have a great house with alot of potential and can't find funding. Looks like it may go by the waste side. Please help this will be our first deal.
under loans and funding --its called "Assignors, I Have found a source?person to fund all your deals"
jrgnsn
We need someone to fund our first flip, not to provide a double closing. We know this house will sell (at least according to people wanting to live there and people not moving). We just need a HML to fund our first deal and we keep getting denied.
Do you already have a buyer for it?
Psalms 118:23 "This is the LORD's doing; it is marvelous in our eyes."
why do you keep getting denied?, did they give you a reason? Hope you don't mind me asking
YOUR HERO, SULLY