money lenders – Hard Money | Contact MCG, Inc.

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.

November 29, 2012
Shawn Molem
-

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.

October 25, 2012
Shawn Molem
-

Hard Money Lenders – The Secret of Successful Funding!

Tags : fix flip investing flip investing flip investing private hard money hard money lenders investing private hard money lenders private hard private hard money real estate real estate investor residential hard residential hard money rules regulations suitable real estate

Category : Home Loan , Real Estate Loans

Actually, only a small number of lenders truly understands the whole concept of fix and flip investing and these private hard money lenders are categorized into the following five basic types:

1. Residential lenders

2. Commercial lenders

3. Bridge lenders

4. High end lenders

5. Development lenders

Amongst these five different types of lenders, you need to find out which lender is going to be suitable for your real estate investment. Generally people start by investing into a single family home, that’s why they choose residential hard money lenders.

But the basic difference between the lenders depends upon the source of funds. That’s why; they can be easily categorized into bank lenders and private hard money lenders.

Bank Type Lenders – If you are working with a lender who is providing you funding with the help of some financial institutions, where they will sell or leverage your paper to the Wall Street in order to get you money. These types of lenders will be following some rules and regulations specified by the banks or Wall Street.

That’s why, in order to get the loan, you need to follow these rules and regulations, which isn’t suitable for a real estate investor interested in doing fix and flip investing.

Private hard money lenders – These are the lenders who work on private basis. They usually work in a group of private lenders, who likes to lend money regularly. Their best quality is that they do not sell their paper to any financial institution or bank. They have particular rules and regulations, which are made to help a real estate investor.

Private Lenders That Are into Fix and Flip – You can easily find residential hard money lenders, who are really into fix and flip loans. Most of the real estate investors find it quite difficult to get financing for buying a property, which they have taken under contract.

And when they finally a good property and contact a lender for funding, their loans can get rejected on the basis of some neighborhood problems. Then the investor look for another property but the lender couldn’t fund them because of market depreciation.

In this way, an investor is always looking for properties. But some lenders don’t have enough money to fund their deal, whereas others are continuously increasing their interest rates, which can’t be afforded. Apart from all these issues, you can find lenders who are willing to lend money on fix and flip properties.

These lenders also have certain rules and regulations like a typical bank or financial institution but they are designed to work in favor for the real estate investor.

October 18, 2012
Shawn Molem
-

Direct Hard Money Lenders – How to Calculate an Offer Price of a Property?

Tags : costs offer direct hard direct hard money hard money hard money lenders lenders usually money lenders offer price price repair price repair costs purchase price repair repair costs repair costs offer

Category : Hard Money Loans , Real Estate Loans

We receive a lot of queries related to the purchase price, repair costs and offer price of the properties. People want to know the calculation process used by direct hard money lenders for making an offer because it is a known fact that hard money lenders only lend 70%of market value after the repairs have been completed on a property.

First and foremost, you need to realize that the offer price and repair costs are two separate containers of money.

Lenders can fund you up to 100% of both of these containers but both of them should be equal or less than 70% of ARV (after repair value).

This doesn’t mean that you’ll get all the money together for closing the deal.

You will get a particular amount of money for purchasing the property at closing table and the repair money will be deposited into an escrow account after the deal is closed by a hard money lender.

If you are in a perfect situation, you won’t have to add any money as repair costs into the offer.

Let me explain this in detail.

It is very important to figure out what kind of repairs you are willing to do and get an estimate. After that you should determine the ARV. You need to take 70% of after repair value and subtract the repair costs.

This is the maximum amount which you’ll get as an offer and still get financing for the purchase price and repair costs.

On the other hand, you need to be very careful while estimating the repair costs and ARV.

But you need to keep in mind that the final amount of ARV and repair costs would be based upon what have been finalized by direct hard money lenders, not you.

This is usually quite different from the calculations of an investor.

The lenders usually hire the services of two different property evaluators to determine the ARV and repair costs. Both of them send more than a dozen comps after evaluating the property.

This is an extremely efficient system for determining the ARV and repairs, which is followed by few lenders like us.

So, if you are fine with putting some money down or invest in repair costs of the property, you can amend the offer price.

Another important thing, which you should keep in your mind, is the fees that are due during loan closing because direct hard money lenders will not finance that. This would be between 4-6% of the total loan amount and you’ll have to pay it from your own pocket.

The crux of the story is that you’ll have to work on several different offers before you get the numbers that make sense.

But it’s a surety that whenever you’ll find the perfect property, it would be worthy of all your time and efforts!

September 19, 2012
Shawn Molem
-

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.

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

0

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

-

What Are Hard Money Loans?

-

Hard Money Lenders – The Secret of Successful Funding!

-

Direct Hard Money Lenders – How to Calculate an Offer Price of a Property?

-

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

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