Posted by ScottE on December 07, 1999 at 13:43:41:
if you are new around here that you are not familiar “of the rules” as you put it.
Without the intention of speaking for Mr. Garcia, the point he was trying to make with you was that unless you KNOW the answer, don’t answer.
There are lots of folks on this site with varying degrees of knowledge and I think you can see that if a ‘newbie’ asks a question and gets a wrong answer, it doesn’t help s/he at all and may in fact cost them a great deal!
The idea is to have a CREDIBLE resource and environment in which all of us can learn and share ACCURATE information. This can only be accomplished when those with the knowledge share it, and those of us without the knowledge (at least in that particular area) listen.
Stick around. This is a great site with great information.
EXCUSE MY IGNORANCE, BUT WHAT IS A “HARD MONEY LENDER” !! - Posted by ditdoe
Posted by ditdoe on December 07, 1999 at 08:57:31:
As you can tell by the subject title I’m a newbie. I often read this message board and the term “Hard Money Lender” quite frequently pops up. Would someone please clue me in on what it is and is this something I should learn more about to help me in my RE Investing? Where might one turn to get literature on something like this?
Please Help!!!
Thanks in advance for your responses
There are many uses of the term - Posted by John Behle
Posted by John Behle on December 07, 1999 at 14:21:50:
I am a hard money lender.
“Hard Money lender” can be used to describe a lender that is an equity lender only. Looks at the value of the property more than the borrower. The “hard” part can also refer to the terms - like in hard to pay or hard to live with.
MORE COMMONLY - it refers to a private individual or company that makes loans. A non-instituional lender that may look at each deal individually and primarily the equity in the property.
So, a common usage of the term might be a mortgage lender that places a first on the property and then looks for some “hard money” for a second since the buyer doesn’t have enough down. That isn’t as common lately as the instituional funding sources (banks, etc.) have really loosened up their criteria. Institutional financing can be easier to get and much cheaper than hard money in this market.
A common usage for hard money lenders can be with deals that are too hard or impossible to finance with insitutions. For example - rehabs. Most instituions don’t want to lend against a property that is in the process of being remodeled. Yet, construction lenders like new construction and aren’t that open to remodels.
So, many times the rehabber will turn to a hard money lender for funds to buy and/or remodel. Then they finance out later with an institution.
Around the country and in different parts of the industry, people have some different usages of the term. There is no standard definition that fits all uses of the term.
Ditdoe. Generally speaking the term Hard Money Lender, to most people means a commercial lender, such as a Bank or any other mortgage lending institution. In that context, Soft Money Lenders would be private lenders. Sometimes it is also used to apply to actual cash money loans of anykind or type of lender as opposed to the Purchase Money Mortgage sometimes given by an owner or take back mortgage where no actual cash changes hands.
Re: EXCUSE MY IGNORANCE, BUT WHAT IS A “HARD MONEY LENDER” !! - Posted by Ed Garcia
Posted by Ed Garcia on December 07, 1999 at 10:03:12:
I suggest, if you are a Newbie, to visit the How-to Articles on this site.
There is an article titled ( A Glossary Of Common Terms Used In LoansAnd Lending)
written by Ed Wachman.
This is taken from that article:
Hard Money Loan.
A loan that is underwritten with the condition and value of the property as the primary
criteria for approval. Secondary issues may include the credit of the borrower, the ability
of the borrower to repay the loan and/or the ability of the borrower to manage the property
or successfully complete a rehab and sell the property. Owner occupancy, debt ratios and
other issues are seldom a factor.
Appraisals rather than purchase prices are used to determine value. Cash out purchases are
often allowed and are another key benefit.These loans are usually approved within days and
are often funded in two weeks or under with times as short as two or three days not uncommon.
The cost for the benefits of speed of funding, lax underwriting and other advantages is
typically a moderately high interest rate (usually low to mid teens) and high points (usually 5 to10).
Thanks Ed. Nothing like an education. We read it and we just couldn’t understand it. Guess we will just have to go back to school. We were certainly unaware of the rules when answering questions. We expect that will probably let most of us out of the game, present company excepted ofcourse. Did the person asking the question understand it?
Re: You don’t know what you’re talking about… - Posted by Ed Garcia
Posted by Ed Garcia on December 07, 1999 at 20:56:01:
JA-FL:
I guess I was a little hard on you. I apologize.
What Scott said is true. You have a lot of new people coming here because they hear what a great forum this to learn off of. Day after day I see answers that are not good answers. Yes people are entitled to their opinion. But certain answers require facts not opinion. I want them to be certain when they give an answer,
that the information is correct.
I hope your understand, I too learn from this forum.