I want to become a hard money lender....how? - Posted by Arthur

Posted by Hank FL on October 21, 2003 at 08:18:43:

SDI = Success Development International

Ron LeGrands old company.

Use Google to find them.

In my area everyone and their uncle is looking for fixers, but they aren’t necessarily looking at hard money. The stock market has picked up recently, but has not been good for years. Real estate has been hot. This has not been gone unnoticed by Joe Civilian.

These guys don’t know about hard money and wouldn’t “get it” even if they did I’m think’n.

These folks don’t have a flipping course which tells them to use the “formula” (MAO=ARV x 70% - repairs & “never pay MAO”)

So I’ve asked some of these guys I see at these rehabs what their crtierion is.

Huh ?

These guys haven’t put pencil to paper on this. If they did, I don’t know what that paper looks like. It’s a HOT market; they just want in and their friendly Realtor has been all to happy to help them overpay. If the houses are financeable, they get some kind of loan and pull the cash out of their pockets to rehab or just pay the whole amount out of pocket they had in stocks or making 2% in the bank.

Then you have all the seminar students that know about what to pay, but overpay due to extreme enthusiasm with some heavy speculation thrown in for good measure. This mad appreciation will go on forever, won’t it ?

Then you have the rental guys that just want to rehab enough to get it “rent ready” and then they’ll refinance to pull out some dough. Their costs are much lower because they aren’t going for that retail buyer. They can pay more than the hard money guy.

What makes my point in a succunct way is the REO market.

Several years ago -before I got in- guys were buying REOs at 50-65 LTV (w/hard $) all day long.

No more.

All these other people are out bidding them.

I could be wrong, but I think I’ve seen a good portion of this hard $ lending dry up.

That’s why I mentioned the undercutting idea so as to put that money to work in short order.

I want to become a hard money lender…how? - Posted by Arthur

Posted by Arthur on October 20, 2003 at 19:39:52:

How do i become a hard money lender in Arizona?

Re: Why do you want to become a HML…? - Posted by JT-IN

Posted by JT-IN on October 21, 2003 at 08:55:01:

Arthur:

Profit potential, I am sure is your answer… However, there have been many posts by folks who want to get into HML, and they really haven’t understood the risks, nor were they prepared for such risks…

Just wondering if you have considered all the risks involved…? Do you have cash in hand to lend… or arre you leveraging to implement HML…?

JT-IN

Re: I want to become a hard money lender…how? - Posted by Hank FL

Posted by Hank FL on October 20, 2003 at 21:53:40:

SDI has a coupl’a courses on the subject I think.

Wealthbuilders of Tampabay has a good one too. www.REEA.com

Call 'em up and ask them about it. They won’t sell it to anyone in competing areas like TN or FL or a couple of other places, but since your in AZ…

You could go to one of the money brokers at your REIA. That might be your best/easiest way to start.

Now I don’t know how much $ you have to lend, but if you have plenty, there is opportunity in undercutting the competition. At least I think so.

Everywhere I go the terms are the same. 15%, 3-5 points, intrest only payments (sometimes amortizing), 3 month pre-pay, blah blah blah.

If you knew how the mechanics work, you could stand up and make a better offer.

Perhaps someone will come along and explain to me why the cost of hard money is not more competitive ? I mean other interest rates go up & down, up & down, but hard money terms are like, written in stone or something.

The stone tablets in your area might even have different #s than my area. I’ve heard that hard money in OH is 18% and up to 10 points !

I AM NOT AN EXPERT ION THIS, I’M JUST TOSSING OUT A FEW IDEAS THAT I HAVE THOUGHT ABOUT. SEEK EXPERT ADVICE. THERE ARE MANY WAYS TO GET INTO HOT WATER HERE.

Re: I want to become a hard money lender…how? - Posted by Dimpil

Posted by Dimpil on October 21, 2003 at 05:26:53:

Why rate are high with HML?

Supply and Demand. They know they have a captive market, the risk is higher (most investment property rates are higher then primary resident rates), and last is because they can.

For a HML they want the maxium return on their investment dollar because you are not keeping it for the long term and they know it. Hence every thing is geard to them making a quick buck, rate, points, pre-pay.

Re: I want to become a hard money lender…how? - Posted by Arthur

Posted by Arthur on October 20, 2003 at 23:12:32:

btw…SDI?

Re: I want to become a hard money lender…how? - Posted by Arthur

Posted by Arthur on October 20, 2003 at 23:11:39:

Thanks Hank, i’ll look into that info. :slight_smile:

I think there is sufficent demand without me having to undercut anyone.

Re: I want to become a hard money lender…how? - Posted by Hank FL

Posted by Hank FL on October 21, 2003 at 09:35:23:

Yeah I see what you’re saying but that supply/demand/risk thing holds true for other areas of lending too.

And those rates all move with the times.