Looking for HARDMONEY in NY - Posted by Greg NY

Posted by Greg Ny on March 06, 2001 at 15:22:04:


Looking for HARDMONEY in NY - Posted by Greg NY

Posted by Greg NY on March 06, 2001 at 09:35:02:

Hello investors,

I’m a newbie, yes a big risk to many lenders. I consider myself very good though. Being a newbie, I’m finding it hard to locate Hardmoney lenders. I am willing to write doctors, lawyers, etc to become Lenders. I am also trying to find away to convince traditonal mortgage brokers to understand and maybe line up a few as well.

My question is: Does anyone have a sample letter(s) that I can send out to potential lenders and brokers as to the advantages of becoming hard money lenders and brokers. Thank you, all responses are greatly appreiciated.

Fellow investor,

Greg NY

Hard Money vs Private Money - Posted by Jim Kennedy - Houston, TX

Posted by Jim Kennedy - Houston, TX on March 06, 2001 at 12:20:43:


In addition to the EXCELLENT advice from Ed Garcia, I’d like to inject a minor point. Most of the experienced investors that I know consider that “hard money” and “private money” are definitely different. Here is a reprint of a post I did quite some time ago:

It may merely be semantics, but I think of “private money” and “hard money” as two closely related but different sources of funding. I consider the main distinction between hard money and private money is that hard money comes from sources routinely accustomed to funding transactions while private money comes from sources that don’t ordinarily fund deals and may never have funded a deal before. These are generally private individuals who you cultivate as a source of funds, e.g. your doctor, dentist, accountant, neighbor, relative, former co-worker, or basically anyone you know who may have some money to invest.

In the case of hard money, the lender generally dictates the terms of the loan. On the other hand, with private money, the terms of the loan are very negotiable between the private money investor and the real estate investor.

Depending on the lender, hard money will want an LTV of 65% or lower, interest in the teens (12% - 18%), with 3-10 points and possibly a pre-payment penalty. Some hard money lenders will base the LTV on the ?after repaired? value as opposed to the ?as is? value. This allows the investor to pay for the repairs as well as the acquisition of the property. In those cases, the repair funds are generally held in escrow and released on draws after each stage of the rehab is completed.

A hard money lender is also known as an equity-based lender. In most cases, these folks are either full time hard money lenders or regularly make hard money loans as a supplemental source of business.

Ed Wachsman has a pretty good explanation of hard money in his How To article titled ?A Glossary Of Common Terms Used In Loans And Lending?. You can find it at:


Regarding private money, when I approach a private individual to see if there’s any interest in funding a deal with me, I try to find out what will make the investor happy. I’ll ask the investor what kind of a return he/she is currently getting on their money. I then ask what kind of return they’d be looking for on our deals. I’ve had people quote me rates as low as 10% and as high as 25%. I then structure the deal so that my investor receives more than he asked for. If he says he’d be happy with 10%, I give him 11% or 12%. If he says he’d be happy with 15%, I give him 16% or 17%. Rarely do any of my private money investors ask for points, but sometimes I’ll offer one or two points just to sweeten the return for my investor. As long as the deal will support the cost of the funds, I’m not too worried about the interest rate. The availability of the money is generally more important to me than the cost. Naturally, if the investor asks for more than the deal can afford to pay, we either negotiate more reasonable terms or I take a pass on that particular investor for that particular deal.

By the way, hard money lenders generally get the funds that they loan out as “hard money” from private investors.

Hope this helps.

Best of Success!!

Jim Kennedy,
Houston, TX

Re: Looking for HARDMONEY in NY - Posted by Ed Garcia

Posted by Ed Garcia on March 06, 2001 at 09:59:32:


I’ve dealt with private investor for years. When I started, it just seemed to grow word of mouth. Today, if I were to try to acquire investors as new lender, I would use a Business Plan. It would tell my story.

Greg Business Plan is extremely important for 3 reasons.

(1) For you the Investor, it allows you the investor an opportunity to lay out a game plan from beginning to end. In that game plan you can evaluate yourself and your plan. If you done your job right, you can put all the pieces of how you operate together like a puzzle. Such as choosing your title company, appraiser, contractor, tell how you plan to invest in real-estate, your experience level, how you plan to buy, market place, how you plan to market or sell them, What your plans are if they don’t sell, etc.

(2) For you to obtain other Backers (Investors), now you can show them a solid buyable plan, rather than give them some verbal mambo jumbo with holes in it. The Backer will feel more confident in you and your venture, because you have mapped it out for them.

(3) For a Working Credit Line from a Bank. This line is just like having an Investor. It’s designed to allow you to buy property making cash offers to get a better price, cheaper cost for the money, faster closes, get more deals, can season your deal, etc.

Greg, these are just a few reason for a Business Plan. Yes if your intentions are to just do a deal here or there, you don’t need one. If you plan to be a real-estate investor or entrepreneur, it’s PARAMOUNT, for growth and getting the real money from banks as well as romancing Investors (Backers). A good Business Plan adds CREDIBILITY to you and your real-estate venture.

Greg, here is an example of an out line of a Business plan that I give in my workshop.


A BUSINESS PLAN is an important tool for the Real-estate entrepreneur in order to obtain a working credit line from a Bank, as well as working with other investors or financiers.

No doubt the entrepreneur grows weary of hearing at every turn about the need for a business plan.

As a banker once told me, I don’t hear too well, but I read real good. Give me your business plan first, then we may talk. The reason for this attitude are several and sound.

First, they want facts, not hype. Most personal presentations are overloaded with hype. Bankers or Investors do not want to be sold a “bill of goods”.

Second, they want statistical and financial data to message before meeting with the entrepreneur.

Third, they want time to do some independent investigation of both the entrepreneur and the proposed business before meeting the entrepreneur.

Finally, they want some evidence of his analytical and conceptual skills.

Prospective associates should be most interested in your plan. Exactly what do you propose to do? How do you intend to do it? Your plan not only discloses you intentions, but how well you have thought our your venture.
Unfortunately, most entrepreneur give scant thought to many aspects of their proposed Enterprise. It often becomes all too apparent in the business plan that the promoter has not done their homework, therefore is not someone with whom you could trust their information.

Even more importantly, the business plan is essential to you planning. The things you would do in writing a business plan will force you to do many essential tasks that you would likely overlook otherwise. The very act of writing a plan for your proposed business will be most informative to you. Definitely, it instills a much needed discipline to the often overly enthusiastic of the " eager beaver investor".

Another definition for business plan, is a “GAME PLAN,” which in all reality we should have when doing a business venture .For this reason, most college entrepreneurial Programs are built around the writing of a business plan.

Most entrepreneurs or investors, are not familiar as to how to write a business plan.

As a result, they try to find someone to write it for them. There is much business for the person who can write good business plans. Unfortunately, much of the benefit of a business plan is lost if you have somebody else write it for you. Sitting down and pounding out the plan, section by section, forces you to do considerable thinking and evaluation of your plans… Without expectation, entrepreneurs who have written their own business plans, report that they were forced to rethink many aspects of their venture when it became apparent to them that they were some serious flaws in their thinking. The parts did not fit together properly.

Your plan is not a blueprint which you follow step-by-step in creating your empire. Instead, consider it a road map from where you are now, to where you want to go. There will be detours and lots of bad roads, but you will still find you plan helpful even if you are continually changing it as new information and new experiences are encountered.

Not surprisingly, most people first want to know what goes into a business plan. The outline below provides some ideas of what might be included in your plan, depending upon the exact nature of your proposed venture. Although I’m teaching you this plan for the purpose of a banking credit line, I felt it important for you to understand the full value of a business plan. Use common sense! What aspects are there to your new enterprise? You’ll have to plan every aspect of your business, either formally or
informally as you proceed. One way or another you must make a lot of decisions about what you are going to do in all phases of the business.


Summary-An Executive Overviewed

The Concept
The Market
The Organization
Your Credentials
The Product or Service
Production Plans
The Marketing Plan
The Financial Plan
The Schedule
Operating System
Control Systems
Growth Plans

Greg, Go to http://venturea.com/business.htm there you will find some information on doing a Business Plan.
I hope this bit of information gives you enough information to get you started in the direction you need to go.

Good luck,

Ed Garcia

Re: Hard Money vs Private Money - Posted by Greg NY

Posted by Greg NY on March 06, 2001 at 12:40:44:

Mr. Kennedy,

Thank you very much as well.

I never stopped to look at the two as being different before. You have opened my eyes to something that was sitting directly in front of me.

It sounds to me that by using a private lender, you become your own private mortgage broker/investor. If this is true, are there courses that teach how to package a deal for a private lender to reveiw?

Thank you,

Greg NY

Re: Looking for HARDMONEY in NY - Posted by Greg NY

Posted by Greg NY on March 06, 2001 at 10:16:45:

Mr Garcia,

You seem to always impress me. This is exactly what I was looking for and needed to hear.

I’ve thought about business plans and thinking about purchasing, “Business plans for dummies”. Not sure as to how much I will get out of this book. But I have learn a lot about real estate, mortgages, and investing from these books.

As I’ve mentioned before, my credit is “shot” (working on that though). I know and can see the advantages of a line of credit. Was wondering if, like hardmoney loans, are their lines of credit that can be obtained with bad credit?

Thank you for your wisdom.

Serious minded Investor,

Greg NY

How to Become a Hard Money Broker - Posted by Jim Kennedy - Houston, TX

Posted by Jim Kennedy - Houston, TX on March 06, 2001 at 15:09:19:


Yes, it is true - you can become a hard money broker. However, as with any business venture, there are many things to consider.

Let me start by telling you that I’m NOT one myself. The information I’m about to share is what I’ve learned over the years. Some of the information comes from study and some comes from experience. I have experience in raising private money but I have NO experience in brokering that private money to other rehabbers. You should also know that I’m neither an attorney, an accountant, a real estate licensee, nor a licensed mortgage broker. Now that I’ve gotten all the disclaimers out of the way, let me give you some idea about my understanding of how to become a hard money lender.

First thing you should do is find out if a license is required in order to become a loan broker in New York. Some states require licensing and some states do not. I live in Texas where no license was required until January 1st of this year.

Next you should familiarize yourself with all of the laws pertaining to loan brokering in your state.

Ron LeGrand offers a home study course entitled “How To Get The Money To Fund Your Deals” that goes into detail about how to find private investors. Some of LeGrand’s materials are available through this web site, but I don’t know if that particular course is one of them.

His course outlines a variety of prospecting methods. The easiest way is to ask everyone you know if they have an IRA or any other investment capital for which they are not getting at least a 15% return safely. This is the only method that I have used to raise private funding and it works very well. I modified LeGrand’s approach somewhat by asking the prospective investor what kind of a return he/she is currently getting and what kind of a return would they want on our deals. Since I wrote the original post that I reprinted above, I’ve found one investor who is thrilled with an 8% return. Unfortunately, she has limited funds, so I can only use her money on smaller deals.

According to LeGrand, you can also advertise for private lenders.

He also says you can use direct mail to find people who would be willing to loan out their money.

You can also set up a booth at trade shows.

You can also conduct seminars to find private lenders.

You can also do luncheon presentations to a targeted audience.

These are the only ones that I remember from LeGrand’s course and there may be other methods as well.

One other thing to keep in mind - if you’re going to broker hard money, you may need more than one private investor, unless, of course, that one investor has VERY deep pockets. Also recognize that once you establish a proven track record, it’ll be much easier to attract investors.

Hope this helps.

Best of Success!!

Jim Kennedy,
Houston, TX