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November 22, 2018
Shawn Molem
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Hard Money in Real Estate Funding

Tags : acquire real estate bad credit buy property credit bad credit bad credit distressed property estate funding fair market fair market value hard money hard money lenders real estate real estate funding

Category : Hard Money Loans , Real Estate Loans

Real estate funding is crucial to your real estate investing success, and contrary to popular belief it’s really not that hard to find the money.

I believe the number one most frequently asked question for a newbie investor is “were do I find the money to fund my real estate deals.” This is perhaps the biggest concern if not the main concern newbie investors face when starting to invest in property.

Believe it or not it’s actually easier than you think to fund most if not all your investment properties, even in today’s tough economy, with no credit, bad credit, little money, or no money.

You literally have access to over $1,000,000, if you know where to find it of course. The problem is most new comers don’t take the time to educate themselves in the importance of finding, funding, fixing, and flipping deals correctly.

Let me explain how the system works…

Most of you go out and try to find the money first and what happens next is you have absolutely no leverage. While you might have a sound proof plan you still have nothing to leverage it with.

Most private investors, at least the one’s I’m going to be teaching you about need to see a property first.

Why? It’s simple, having the property in contract is going to give you the leverage you need, but it can’t just be any property out there. You have to buy right. Meaning you must purchase the property at a wholesale price. This will determine if you’ll get real estate funding for your deal or not.

I can imagine what most of you may already be thinking. “How can I buy a property if I don’t have any money or credit, it’s just not possible.” How wrong you are.

Find the deal first and the money will come. I can almost Guarantee it.

Understanding how to find the deal first will give you leverage to fund all your deals.

Let me give you an example of what a good deal should looks like.

It’s a secret most newbie investors struggle with when learning how to buy a property because they simply just don’t know how much to pay for a property. I like to call it the 65% Rule. What is the 65% rule? The 65% rule means you don’t offer to purchase an investment property for more than 65% of the fair market value.

So let’s just say you found a distressed property that you know once it’s been rehabbed is worth $100,000 fair market value.

By using the 65% rule you would multiply it by $100,000 or $100,000 x.65 which would equal to $65,000.

In the example above I would offer no more than $65,000 for the distressed property. This leaves you a safety net and a potential profit margin of 35% or $35,000 not including closing costs.

Can you see your leverage power now!

Do you understand how powerful the 65% rule is. Now you see why I’m telling you to first find the deal in order to acquire real estate funding. By following the 65% rule you can acquire real estate funding with little or no money and no credit or even bad credit. I bet you’re wondering who these lenders are right about now?

These lenders are what we investors call hard money lenders.

Unlike the traditional banks that want to check your credit and your income, hard money lenders lend you money based on the property and not you personally.

September 23, 2018
Shawn Molem
0

Private Hard Money Lenders – Choose the One, Which Suits You Best!

I want to talk about the core difference between private and institutional lenders. An institution is basically a bank or a credit union, which provides funding for different stuff.

On the other hand, private is more about a bunch of people, who works under a private organization, which works towards helping people buying and selling good deals by providing financing. They are not held by government or any other regional organization but they work by themselves and use their own money.

Now, we come down to two basic types of lenders in the world of real estate:

1. Institutional lenders

These are the hard money lenders, who are a part of a bank or any other federal organization and they work with them. Although, it is quite difficult to get a loan from them because they look at lots of things including the borrower’s credit history, job, bank statements etc.

These are only stuffs that institutional hard money lenders are concerned about. They don’t have a real estate background, that’s why; they don’t care much about the worth of a property. Even, if you have a good deal, they won’t lend you unless your credit or job history is satisfactory.

There’s a huge gap between institutional lenders and real estate investors, which isn’t easy to fill.

2. Private hard money lenders

Private money lenders are usually real estate investors and therefore, they understand the needs and demands of a borrower. They aren’t regulated by any federal body and that’s why, they have their own lending criteria, which are based upon their own real estate understandings.

Their main concern is property and not the borrower’s credit history or bank statement. The motto of private hard money lenders is simple: If you have a good deal in hand, they will fund you, no matter what. But if you take a crap deal to them, then they won’t fund you, even if you have excellent credit history because they believe that if you’ll make money, then only they would be able to make profit.

If you have found a hard money lender but he or she hasn’t got any experience in real estate investment, then they won’t be able to understand your deal. They will always think like a banker.

A true private money lender is one, who can help you in evaluating the deal and giving you a proper direction and funding if you find a good deal. But if the deal is bad, they will tell you straight away. Before rehabbing a property, they know what would be its resale value, due to their extensive experience.

The basic difference between institutional hard money lenders and private hard money lenders is that the institutional lenders try to have everything in place and perfect order. They want to have all the figures and the amount of profit they would be making. They completely ignore the main asset, i.e. the property.

Whereas, private money lenders use their own fund and experience to realize what’s store for them. They don’t try to sell the paper or recapitalize. They just look at the property and see if it is worthy enough to rehab or not.

In the end, they just want to make good profits along with the borrower. If anyone goes to them with a good deal, they will fund them. Some of them only fund for the property, whereas, others gives funding for the repairs too as long as they can see a good ROI.

December 29, 2014
Shawn Molem
0

Hard Money – Is it really hard to get?

Tags : hard money hard money loan

Category : Hard Money Loans

Hard money isn’t really hard, rather it is the best option for you to choose if you are looking for a much simpler way to get a loan. Hard money is typically the easiest money to get.

There are hard money lenders that may ask for complete information about the borrowers or a few may get ready to lend the money by just knowing the basics of the borrowers. The assets on which the hard money lenders are lending money on is of utmost importance for the hard money lenders.

They are taking their security based upon the assets, not necessarily based upon the borrowers. That’s where they get the terminology “hard” because they lend money that is based upon the hard assets.

The two most important things that one should know about hard money are:

The hard money loan is not a signature loan:

You say, please give me a signature loan. I have good credit scores, job, work history. I am really going to get a loan without any collateral and there are no hard assets. That’s called a signature loan, where you don’t have anything that you are tying your security to it. That’s not hard money.

That’s something that you should ask your bank to do and your bank is going to look at your credit, job history and all kinds of stuff and they are going to determine based upon you, not based upon your collateral because you don’t have any.

The hard money loan is not a Title loan:

Hard money loan is also NOT a title loan. Typically, a title loan is like if you have a car and your car is clear and you want some money of that. You go, give them your title and they’ll give you some money based upon that. Then, you will pay them off down the road.

That’s the title loan and has nothing to do with hard money loans. Hard money lenders have nothing to do with cars or anything else like that.

That’s kind of the differences when it comes to hard money lenders. There are business hard money lenders and real estate hard money lenders. You will be going to make sure if it’s tied to real estate, then you need to work with a real estate hard money lender.

November 17, 2014
Shawn Molem
0

Hard Money for Instantaneous Monetary Needs

Tags : hard money

Category : Buying & Selling Tips

Are you in search of instant finance? If the promoter of your dream house is selling it to someone else because of your delayed payment, hard money loan is the best alternative for you. It is the best choice when you are not in a position to delay your payments. Not only in case of buying a house, but even if you desire to establish a business for leading your life or expanding the already existing trade, it will serve your purpose. In short, for any purpose that requires immediate payment, hard money appears to be an ideal option.

Almost every finance seeker prefers obtaining traditional bank loans over hard money options. The main reason behind this is the long time taken for the applications to get approved. In case of instant needs, if one would wait for the bank loans, he will surely miss the purpose for which he applies for it. However, if you have time in hand, you can wait for the traditional bank loans to get approved. Hard money loans are considered as one of the most effective solutions when someone requires the fund immediately.

When you apply for a bank loan, the lenders ask you to submit various official documents along with the application. The lending institutions do not tolerate defaults on loans and hence they require doing proper verification. These credentials are submitted for the same purpose. The credit record and the salary statements are checked and the chance of an applicant of defaulting on loans is identified. Depending on this analysis, the lenders decide whether to approve or reject the application of a particular person. No such process of verification is involved in case of hard money loans. You can apply for hard money loans without submitting anything with the application.

The reason behind the hard money loans being free from such verification is its nature of being collateral-based. An applicant must possess a property in return, to which, he or she could receive the finance. Everything depends upon the asset of the applicant and not on his credit history. This is because the lenders, get something as a guarantee, which they can sell if the borrowers do not repay the debt on time. Before giving a positive response to your application, the lenders would visit the property to see whether you are eligible to get the amount that you require. Based on the condition of the asset, the hard money lender decides on the sum you are eligible to receive.

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.

Hard Money in Real Estate Funding

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Hard Money in Real Estate Funding

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Private Hard Money Lenders – Choose the One, Which Suits You Best!

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Hard Money – Is it really hard to get?

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Hard Money for Instantaneous Monetary Needs

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What Are Hard Money Loans?

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