Hard Money Question - Posted by Scott PA

Posted by Brent_IL on August 08, 2003 at 22:14:14:

There is a very thin line between private money and an unregistered security.

The SEC has people whose sole job is to call up vague, optimistic sounding, or investor-seeking advertisements to determine what is actually being offered. If they think that you are doing something that rightfully comes under their domain and should be regulated, or something like a Regulation D offering that is exempt as long as you follow protocol, and you haven?t, they will consider it their duty to put you out of business. Someone may decide make an example of you to dissuade others. Legal fees alone can be staggering.

If you want first mortgage money, ask for first mortgage money. It?s better if you have the note set up ahead of time and offer to sell the existing note. It is also easier to adjust your discount to meet the note-buyer?s interest expectations than it is to quote differing terms and points.

If you are going to spend a couple of hundred thousand dollars on real estate, don?t quibble about 1% of that for a qualified lawyer. Without a lawyer, you won?t have legal fees, but you may not have much of a RE career either. One cautionary opinion.

Hard Money Question - Posted by Scott PA

Posted by Scott PA on August 07, 2003 at 20:19:23:

What loan to value does a hard money lender usually loan at? 65%, 70%, 75%?

Re: Hard Money Question - Posted by jasonrei

Posted by jasonrei on August 07, 2003 at 23:22:15:

My hard money lender (in TX) does 65%. He has gradually gone up to high 60’s. He will do 70% on rehabbed properties.

I don’t think he ever pulled my credit or asked about assets, though he was aware that I’d had a few deals under my belt. Sorry I don’t know any HMLs in PA.

Re: Hard Money Question - Posted by Tom PA

Posted by Tom PA on August 07, 2003 at 20:45:27:

My experience has been around 60% without a problem. Some up to 70% but then I start seeing more criteria than just the asset coming into play.

Now I need to qualify that I have only investigated Hard Money Lenders in my area. I haven’t needed it yet, but, I have spoken with several and know where to go to get it when I need it.

Where in PA are you located?

Re: Hard Money Question - Posted by Larry

Posted by Larry on August 07, 2003 at 23:51:40:

Jasonrei,

I’m also in Texas, would you mind sharing the name of your Hard Money Lender in Texas. You can Email me privately if you like.
Larry

Re: Hard Money Question - Posted by Scott PA

Posted by Scott PA on August 08, 2003 at 13:26:23:

I am in the Pocono’s. Monroe County.

Re: Hard Money Question - Posted by BigHarold

Posted by BigHarold on August 07, 2003 at 21:18:37:

Tom,
I’m in Harrisburg, PA and have only found ONE source of “hard money,” but that source definitely has more criteria than just the asset! I’m desperately looking for hard money in this area. Any help you can give would be greatly appreciated, as the properties are ready to go as we speak. Thanks in advance.

Harold Wilson
Real Estate Investor

Re: Hard Money Question - Posted by Brian H

Posted by Brian H on August 07, 2003 at 22:48:54:

You guys are all missing the BIG picture.

Forget about Hard Money. It is too expensive. Nowadays there are NOT too many true Hard Money Lenders. True Hard money is based on EQUITY not credit or assets.

Private Lenders are the solution to your PROBLEMS.

If you knew how to find them and they are easy to find you could offer them a few OPTIONS.

A percentage of the PROFIT or 15 percent simple INTEREST.

The most successful people in this business do not use Hard Money.

Re: Hard Money Question - Posted by Jasonrei

Posted by Jasonrei on August 08, 2003 at 16:11:42:

Hard money can be a good way to start out. I agree that private lender money can be better. Thing is, hard money is usually much easier to find.

That said, I hope to have a million in private lender money by the end of the year. How do you get your private money? If you don’t mind, maybe we can swap private lender stories by email. We can go over our presentations, docs, terms, etc.

Re: Hard Money Question - Posted by Tom PA

Posted by Tom PA on August 07, 2003 at 23:13:42:

Brian,

The equity in the property being purchased in the asset to which I am referring. That’s why it’s called asset-based lending.

I disagree with you on the point that Hard Money is too expensive. There are times when it is the way to get the deal done.

Successful people get the deals done and make money in the process. There is no single formula for success.

Best wishes,
Tom

Re: Hard Money Question - Posted by Brian H

Posted by Brian H on August 07, 2003 at 23:27:03:

Tom,

I am not disagreeing to what you are saying.

If you knew more about Private Money you would understand where I am coming from and USE it.

Your Hard Money person is going to charge you how many points?? Private Money–Zero

Your rate is what?? Private Money–10 to 15 percent simple interest.

You need to repay the loan in what time frame?? Private Money–1 year, 2 years.

You need an appraisal?? Private Money–Not required.

Oh by the way. With Private Money you can close on a property MUCH quicker. 2 business days. You would have more LEVERAGE in negotiating when you tell someone you can close in 2 days.

Re: Hard Money Question - Posted by John Katitus

Posted by John Katitus on August 08, 2003 at 01:06:42:

I would be very interested to know how to find private money. Where and how do you advertise? Thanks.