1st Call From Hard Money Lender - Posted by BR2

Posted by Ben on May 06, 1999 at 22:38:07:

No, its not THAT good, considering the most favored
borrowers are getting in the range of 6%.

1st Call From Hard Money Lender - Posted by BR2

Posted by BR2 on May 06, 1999 at 08:17:12:

Not having much success finding hard money lenders until yesterday. This guy called and asked what I needed. I explained I was looking for 20K to be repaid in approximately 6mths. He replied, let’s set this up on 5 yrs with no prepayment penalty @ 10% no additional fees. (I’m thinking great!) Then he says how much do you have to pay down and he wants to do a credit check?

Is this normal?

Thanks in advance.

Hard Money Lender wants a down payment? - Posted by Brandi_TX

Posted by Brandi_TX on May 06, 1999 at 11:00:46:

How much down? None of my hard $ contacts have ever asked how much down. Some have asked about credit, but said it was just to get an idea of who they were dealing with so they could assess their risk.

I would be sure to ask them what is the maximun LTV they allow and if that is based on the after repaired value or as is. If you get anything more than 65% LTV on the after fix up value, you may be dealing with the wrong person. (Or you may have found a rare Gem)

Just be on the look out for people telling you what you want to here (which is hard when at first, you may not know how to explain exactly what you want). Hard money is not something you should have to jump through alot of hoops to get.


Re: 1st Call From Hard Money Lender - Posted by JohnB_NJ

Posted by JohnB_NJ on May 06, 1999 at 09:21:30:

This isn’t that bad. I would like to find a source of private funds at 10%! I guess since the yield to the investor is lower, he/she would like to lower his/her risk by looking at the borrower’s personal credit report. Now, I don’t have a problem with that because my credit is good but if yours is not so good, then you have to find a HM lender that makes loans based only on the property value and the LTV. Of course you will pay a higher interest rate 15% and up, you will pay upfront points and a prepayment penalty if paid off early (less than one year is what I am finding). But again, if the deal will make me money, than I do not mind borrowing “expensive” money if I can’t get it quick and close quickly. Besides, I would like my investors to knock on my door asking me “When will you have another good deal for me to invest in?” If you make them money on their money, they will return. I like borrowing money from professional people that make good money but do not have the time to invest it in high return/low risk investments vehicles. Check with doctors, lawyers, CPA’s, engineers…these professional people understand that their investment capital should be working hard for them at a good rate of return without the high risk.

So, to close, your “hard money” lender is not asking the world. He wants to know what you are going to have in the deal and to lower his risk, would like to know more about you. Thats fair. Wouldn’t you agree?

Good luck with your investments!

John (NJ)

Re: 1st Call From Hard Money Lender - Posted by Ben

Posted by Ben on May 06, 1999 at 08:43:49:

This actualy seems pretty generous. The hard money lenders I have seen want at least 13%-18% with
4-10 points with the borrower paying every dime of fees. This seems pretty reasonable.

Re: Hard Money Lender wants a down payment? - Posted by BR2

Posted by BR2 on May 06, 1999 at 15:44:27:


Thanks for responding. This HM lender is asking for 2k down, no additional fees. Since this is my first HM lender I’m a little leary. What if he’s a con artist?
How do I protect myself since I’ve never dealt with him before?

Thanks again.

Re: 1st Call From Hard Money Lender - Posted by BR2

Posted by BR2 on May 06, 1999 at 15:53:15:

Does this sound, “Too good to be true”?

Re: Hard Money Lender wants a down payment? - Posted by J.D.[Journey] Swindell

Posted by J.D.[Journey] Swindell on May 11, 1999 at 07:45:43:

From my recent experience in DFW, TX, I have
learned the hard way that even an established hard
money lender can be a con artist!
I learned it is extremely important that the
lender document in writing everything they tell you
about doing business with them. If possible I
really believe that it’s worth the expense to have
an atourney review all paperwork, agreements,
understandings, promises, ect.before you reveal any
information to the lender and before you sign
Also, I serriously suggest that you consider
documenting [recording] all conversations. If the
lender has nothing to hide then why should they
mind if you record what they are saying?..But be
aware, as I understand it, by law, you must tell
the person that you are recording the conversation.
[Anyone…please corect me if I am wong on this] I
really wish I had recorded all my conversations. If
I had,I potentially would have saved a good deal of
agravation, time, and ultimately money. Thus, I
learned a hard lesson when it’s your money at
stake, don’t trust in what someone states in
conversation concerning business unless they will
document it in writing and you can verify that
I know there are some good mtg.brokers. Try your
yellow pages or the Sunday paper for mtg. brokers
as they are a good source of hard money lenders, so I am told. Also, you might want to call Ed
Garcia, he was quite helpful. I don’thave his card
handy, but you can find him on this site in the how to articles. Hope this helps steer your clear of
some problems, good luck.
J.D. [Journey] Swindell…

Re: Hard Money Lender wants a down payment? - Posted by Brandi_TX

Posted by Brandi_TX on May 07, 1999 at 24:13:43:

You never mentioned how you found this guy, so I am not sure how you came to think he is reputable. hkCA has a good point, have an Attorney go over the papers before the deal is done. Get everything in writing and don’t sign ANYTHING until you know you understand it and how it may affect you.

In the mean time, keep searching for other HM lenders. You will get a feel for the more traditional method of hard $$ if you find more than one source to compare this guy to.


Re: Hard Money Lender wants a down payment? - Posted by hkCA

Posted by hkCA on May 06, 1999 at 18:00:50:

You should have an attorney review the loan papers before you sign them. Then, depending on the state you’re in, funds are dispersed and title changes hands at closing by the escrow company or the attorney handling the closing.