Short Term Hard Money Idea - Posted by R J (VA)

Posted by mike on December 15, 2000 at 09:59:38:

Would the 25% interest [ on deed ] be for the duration of the primary ownership or the duration of the fix up, if for the amount of fix up money then how much interest pre-pay penalty etc.

Short Term Hard Money Idea - Posted by R J (VA)

Posted by R J (VA) on December 13, 2000 at 12:15:41:

We are fairly new to the CRE website (about 2 months) and have found it to be a most interesting and informative forum for the exchange of advice and ideas. One thing we’ve noticed is that there sure are some creative people in this business!

We have decided to pursue an idea, formulated by what we feel are many potentially profitable deals that never get done. It seems to us, from reading many of the posts that, often times, a relatively small amount of funding over and above the usually “easy” hard money funding could make many deals work.

As an example, a property is located that would conservatively appraise at $70,000 after, let’s say, $5-6,000 worth of fix-up cost. Property can be purchased for $40,000. From our knowledge of hard money lenders, we feel it would be fairly easy to obtain a $35-40,000 hard money loan to make the purchase. When a person finds this deal, but has no other funds for fix-up and carrying the property until sold…what happens? Probably nothing!! When we first started out with no money and no credit, we know how hard that can be.

So what we want to explore is a certain “niche” that appears is not being addressed…We want to consider providing short term “hard money” funding in smaller amounts - as an investment…not as a loan. In other words, regardless of credit history or assets, we provide the funds for fix-up, downpayment or for any other purpose - as a partner in the venture. Obviously, we would be expecting some form of security to do this.

We’re curious…does anyone feel there is a need for this kind of service?

Re: Short Term Hard Money Idea - Posted by Ken

Posted by Ken on December 31, 2000 at 04:50:52:

Are you ready to do deals in Western U.S. ?

Re: Short Term Hard Money Idea - Posted by TIm

Posted by TIm on December 18, 2000 at 18:57:29:

Not only do you have a great idea but, I’ve been doing it for years.

WARNING!!! before you ever loan money to anyone there many things you must be aware of and I don’t think it would be appropriate to discuss all of the issues in this forum.

At least make sure that your are not subject to RESPA, that you do not need a license, fully understand RE law in your state and always, always, always control title.

You can do very well OR get really hurt. Be careful!


Sounds good in theory - Posted by CurtNy

Posted by CurtNy on December 13, 2000 at 16:32:36:

This niche sounds good, but you say it wouldn’t be a loan but an investment. I’m not sure I follow you, are you saying you pay the fix up costs, down payment etc… and you in turn get a part of the profit? If so then you would just be a partner… not a new idea. Never the less, there are tons of investors that need that extra cash to finish a deal and I’m sure you can make a lot of money doing it. But why not give out small seconds with balloon payments that way your secured (just make sure your cltv is still low). Good Luck.


Re: Sounds good in theory - Posted by R and J

Posted by R and J on December 13, 2000 at 18:48:10:

Hi Curt,

Thanks a lot for your insight! From the response this post has gotten in such a short time (direct e-mails), it truly appears this idea might not be just a “niche” idea but a potential goldmine if structured and administered properly. Quite frankly, it makes me wonder…if someone isn’t already doing this…then why do I think it would work! But then again, the idea comes directly from reading posts by people who have that “killer” deal but no money or credit.

You are correct that by investing rather than lending we would be acting in a partnership role…but if reliable partners with integrity (and small amounts of money to invest with the a reasonable expectation of a nice return) are so easy to find, it seems like a lot of people on here don’t seem to know where to look!!

Obviously, this approach would not be with out risk. But our idea is to handle the fix-up, downpayment or investment money just as a hard money lender would, without creating a cumbersome bureaucratic procedure with a lot of red tape. So what we’re requiring is a simple summary of the deal with an explanation of the purpose for the funds, a copy of a current appraisal, an exit strategy and any security offered if other than the property itself. For this we will expect to be named on the Deed with a 25% interest in the property, no payments or interest for up to 6 months.

I guess in order to test this rather than just theorize, it might take getting burned a couple of times. Thanks again for your comments.