Real Estate Loans – Page 7 – Hard Money

December 11, 2012
Shawn Molem
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Hard Money Lenders – Investing in Single Family Properties

Category : Hard Money Loans , Home Loan , Real Estate Loans

I have found many real estate investors who find it very difficult to get financing from hard money lenders who will lend them money easily.

This is because many investors want to invest in properties which are quite economical and needs hard money loans under $30-50,000. But the problem here is that most of the lenders are not interested in doing loans for smaller properties.

They believe that these kinds of properties aren’t exciting enough. Sometimes, they also don’t want to do loans of $100,000.

But Do Hard Money is one of those hard money lenders, who don’t mind lending loans less than 40 or 100,000 dollars. We do not have any minimum as far as the loans make sense and you are able to pay fees for that.

So, if you’ve been struggling with investment opportunities and seeing opportunities around you, come talk to us. We would be happy to work with you. We would be happy to do the loans. No minimums or whatsoever and that can enable you to do those types of properties.

That’s why, if you have an investment opportunity around you, which you think would be good enough after drawing all the comparables and doing all the calculations, then you can come to us straightaway because we don’t have any minimums. This could be a great help for those who want to invest in small properties.

Personally, I think that those properties are fantastic. I think they are great way to start in real estate investing or they are even a great way to do lots of properties.

According to me, these properties are the best if you are just starting with real estate investing business. It is also good for those who are interested in working on single family homes because they could be rehabbed easily as compared to the commercial properties.

One of my friends is from Mississippi who only deals with small and cheap homes. He generally buys a property, which is between $30-50,000. He does fix and flip and later, sells them at around $70-80,000 after doing the repairs.

Basically, there are lot of investors who are ignorant about these small or single family properties because they think that the profit margin would be much less as compared to the commercial properties.

But you need to keep in mind that if you have bought a property for half a million dollar and the worth of the properties go down by 10%, then that means there would be a loss of $50,000. On the other hand, if you have bought a property which is worth of $30,000, then 10% loss would only be $3000.

With these kinds of properties, you have a lot more to gain and very less risk involved and that’s why, they could turn out to be one of the best investment opportunity for you.

December 6, 2012
Shawn Molem
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Residential Hard Money Loans – 3 Crucial Fundamentals!

Category : Real Estate Loans , Residential Loans

I am 100% sure that you would not like to end up in a default situation.

But before I discuss all that stuff, I would like to ask some very important questions…

1. Are you aware about the factors that make residential hard money loans different from the others?

2. Are you aware of the basic difference between bogus and real residential hard money lenders?

I would really like you to stop here for a moment and think meticulously about these two questions. And if you are not able to answer them as “yes”, then you can’t get success as a real estate investor.

So without wasting further time, let me answer these questions because they are the first two crucial fundamentals, which you should know before getting a loan.

What is the basic difference between residential hard money loans and others?

Majority of people will start by asking the interest rate or payment terms and conditions while analyzing this question. But they aren’t the most important factor.

The most important factor here is the criteria, which a lender uses while funding a loan to you. If he is asking for a credit score before giving you a loan, this means that they are following the traditional lending rules and they will sell your paper to banks or Wall Street.

These loans do not have any sovereignty or flexibility, which is vital if you want to be successful as a real estate investor.

What is the basic difference between real and fake residential hard money lenders?

There are different aspects which need to be considered while answering this question. One of the aspect was hidden in my answer to the last question i.e. a fake hard money lender sells your paper and don’t fund you directly. This is really bad for you as a borrower. Let me tell you how…

If you are working in a fix and flip situation, there are many things which can go wrong, whether you have planned for them or not. In this situation, it is very important to work with a true lender whose success is attached to yours.

But if your loan has been sold off to Wall Street, you could do nothing in a problematic situation. You cannot ask for loan extension or anything else and there are chances that you will end up in a default.

There is another type, which is known as fee collectors. These are the people who call themselves a lender but they are not. They will just help you in submitting a loan application and pay fees. After that, you will have to submit your loan request to the real lender.

These fee collectors don’t care whether your loan application gets approved or not because they have collected their non refundable fees.

You must be wondering what the third crucial fundamental is.

If you really want to be successful as a real estate investor, you need to have a perfect plan to execute. You need to realize that real estate investment isn’t for faint-hearted. It is for those who have a lot of guts and courage. These are the people who can take quick action and can do things in a short span of time.

Another important aspect is that hard money loans are short term and if you are unable to pay it off in time, then you can get in a trouble situation.

So, these were the three crucial fundamentals, which you need to understand before applying for residential loans.

December 4, 2012
Shawn Molem
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Best Real Estate Investments – Tips on Making Successful Investments

Category : Hard Money Loans , Real Estate Loans

Being a real estate investor, you need to make sure that you choose the best deals because if you are unable to find that, then you will face troubles while obtaining hard money loans. So, your ultimate goal should be to focus only on finding the best real estate investments.

I have discussed before that if you want to make good money in the real estate scenario, then you need to compare the estimated value of the property to the values you get from the evaluators, which are termed as comparables. In this way, you are using 2 comparables, one from the evaluator and the other based upon your findings.

If there are some deficiencies in your estimated value report, you can use the option of “Property Approval Plus”, which will give you all the information related to the locality where your property is situated. This will definitely help you in finding the best real estate investments with a planned and calculated approach.

That report will have the list of all the homes, which have been sold recently. It will give you a detail account about the background of the property i.e. when it was sold, for how much money it was sold, tax liens etc.

As the list is going to provide you all the details about the homes, which have been sold recently in the locality, so it will also help you to realize that whether the market is in depreciating or appreciating condition.

The report will give detailed information about the particular neighborhood; you are trying to work in. The number of homes that have been sold, the number of homes that are currently in the market and the comparison between the actives and solds of the last few months. These trends would be a great help in determining the final value of the property.

It is basically something that you should do yourself. While determining the value of your property, it is necessary to start your research by looking at the subject property and then determining the actives and solds in the neighborhood, having similar features. This is the best practice, which is ignored by many new real estate investors and ultimately, they have to pay the price.

After you are able to determine a rough value of the property in mind, this estimated value can be used as a comparison. But if the estimated value of the subject property isn’t right, then you need to an extensive research because it is the most important step. You can talk to other evaluators, drive in the neighborhood by yourself and check if you are missing something.

Finally, the Property Approval Plus will tell you about the economics of that particular area i.e. whether the homes are being sold or not or what is the nature of the market, if it is appreciating or depreciating. What is the condition of the homes, which are up for selling or the conditions of foreclosure properties?

Do Hard Money can help you in getting all of this data, if you will check their “Property Approval Plus” section. This service is quite cheap and it gives you some very important information, which will ultimately help you in making the final decision.

November 29, 2012
Shawn Molem
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What Are Hard Money Loans?

Tags : fix flip funding deal hard money money lender money lenders private money real estate

Category : Hard Money Loans , Real Estate Loans

To get a hard money loan, you just need to have a good collateral or property, which is completely opposite to a traditional loan, where the lender is only interested in your particulars. That’s why; you are eligible of getting these loans even if you have a bad credit history or no job history.

This is the reason behind the success of hard money and fix and flip investing.

There are investors who get confused while looking for hard money loans because of the usage of terms like “hard money lender” and “private money lender” in the real estate investment business.

What I have learnt from my experiences is that a hard money lender is basically a professional lender, who is doing it for a living. They usually have higher interest rates and they also charge points, which is 1% of the total loan you are getting and you will have to pay that right after your loan is funded.

For example, a hard money lender can also charge you up to 20% interest and 4 points. Most of the lenders I have used, are the people referred to me by my friends or I have found them via internet.

On the other hand, most of the private money lenders are my friends or colleagues i.e. people who are within my social circle. They charge you less interest rates like 8 to 10% with no points.

If you are looking for good amount of money, hard money lenders could be the best choice. That’s why; they are the best options in case of mortgage as these lenders feel more secure that they will recover their money soon.

While doing my first deal in real estate, I used the services of a lender who charged me 15% interest rate and 3 points for 80% of the purchase price of the property including repairs. The rest of the funding was done by private money as I use them on second or third place.

So, basically I am using private money for 25% of my fix and flip needs.

This is basically what I know about private money versus hard money. There are some major differences but the main purpose is to have good connections and building up good relationships amongst each other to get complete funding for your deal.

I don’t use my own money for funding a deal, even though I can afford it because when there are two parties involved, the profit margin also increased and in that way, both of them can make money. It helps you in spreading wealth.

November 20, 2012
Shawn Molem
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Hard Money Loan – How to Get It?

Tags : finding hard money getting hard money hard money lender hard money lenders hard money loans price rehab costs purchase price rehab

Category : Hard Money Loans , Real Estate Loans

Believe it or not but getting hard money loans are very easy – IF you know where to find it. The easiest way of finding hard money lenders is through web.

It is important to realize that there are many companies, which claim to be a hard money lender but they aren’t in a true sense.

The reason behind getting hard money easily is because you don’t need to go through the conventional requirements of showing your credentials, such as job or credit history. Hard money loans are ONLY given on the basis of property you are buying.

That’s why, it is better to stay away from the places which will ask for a credit score requirement or bank statement before qualifying for the loan.

All the lenders will check your credit report or documents at some point of time but true lenders will only evaluate it to determine your interest rate, origination points and the duration of loan.

Another place to look for a hard money lender is your local REI (Real Estate Investment) club. You can talk to the other investors and find out whose services they are using.

OK, so I have given you some tips here about finding a hard money lender. Now, I would like to answer the main question.

Getting a loan is absolutely different from getting a traditional mortgage for your personal residence. You can only apply for loan after you have taken the property under contract that you are willing to buy.

True lenders work really fast and they can fund you within 7 business days as well but they can’t tell you the exact loan amount, until you show them the property.

As long as you haven’t faced bankruptcy in the last 24 months or you don’t have any current tax liens, you could easily get a hard money loan.

Few things which acts as a hurdle for those who submit their first application are:

1) The amount of loan you’ll get from a lender would be different from what you need.

Hard money lenders usually lend up to 70% of the estimated ARV (After Repair Value) for the property and this amount could be used for purchasing and rehabbing the property.

They will send independent property evaluators who will determine the ARV. A real lender will consider at least 10 comps before finalizing an ARV for the property you want to invest in.

This could be a bit different then what you have expected. If your purchase price and rehab costs are more than the 70% ARV, then you will have to bridge the difference yourself.

This is the biggest mistake which investors make. They think that if a lender is advertising that they will finance 100% of the purchase price and rehab costs, then it would work every time.

But that’s NOT the case. For getting 100% financing, you need to have your purchase price and rehab costs within 70% of ARV.

2) No proper planning for loan fees or origination points.

Hard money lenders are paid on loan points. There’s no other way out. They can’t fund you for points and it is usually of 00.

The borrower will have to pay for those points at the closing table if they want funding.

Even if a lender is advertising “no money down”, they are basically talking about the loan, which doesn’t include points.

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Category Archives: Real Estate Loans

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Hard Money Lenders – Investing in Single Family Properties

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Residential Hard Money Loans – 3 Crucial Fundamentals!

-

Best Real Estate Investments – Tips on Making Successful Investments

-

What Are Hard Money Loans?

-

Hard Money Loan – How to Get It?

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