Sign of the times

The private money topic is very big right now due to the state of our financial institutions, especially when it comes to real estate. I would use hard money to get into deals then re fi out, not anymore. Appraisals are extremely tough and even then banks don't lend.

Private $ is the way to go, but not easy to obtain. Does anyone see this market changing anytime in the near future? Someone needs to start offering 3 year loans at 7% (hard money) to investors. That would make sense.

Thoughts?

Edited: 06/26/2010 at 10:31AM

Jon Holdman

Real Estate Investor · Denver, Colorado

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Icon_minipost Nov 15 '09, 10:27 AM

Originally posted by stambam

Someone needs to start offering 3 year loans at 7% (hard money) to investors. That would make sense.
Thoughts?

Sure. They're called banks. You're talking about a bank rate loan, not hard money. If you have a relationship with a bank that does commercial real estate loans you should be able to get those terms.

Hard money, on the other hand is going to be at least 12% plus several points. And that would be cheap.

Edited: 06/26/2010 at 10:31AM

Jon Holdman, Flying Phoenix LLC

Jim Wineinger

Real Estate Investor · ten mile, Tennessee

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Icon_minipost Nov 15 '09, 11:20 AM

Originally posted by stambam

Private $ is the way to go, but not easy to obtain. Does anyone see this market changing anytime in the near future?

The reason that Private $ are expensive today is because people can not get those regular loans. When the economy eases up so that people can again get bank loans, then you will see the Private $ market respond accordingly. Not before, and in my opinion not soon.

Edited: 06/26/2010 at 10:31AM

George Bloom

Hard Money Lender · West Palm Beach, Florida

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Icon_minipost Nov 15 '09, 01:15 PM

Don't look for the banking environment to improve in the near future. In my opinion we are looking at a minimum of three to five years before we see any sustained improvement in the banking sector. In fact banks are continuing to fail in record numbers and that does not bode well for light at the end of the tunnel. I have been through several recessions but nothing like this.

Also, bear in mind that the banks are hunkering down simply because they have no idea what the next step the government will take in their efforts to bring some order to the chaos that was created. I speak to bankers regularly and the most common message I hear is that they are waiting to see what happens next.

Edited: 06/26/2010 at 10:31AM

Matt S

Real Estate Investor · Atlanta, Georgia

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Icon_minipost Nov 15 '09, 07:34 PM

Thanks all. Sounds like I need to look into this bank rate loan (commercial). What are the general financial requirements for these loans? Do the bigger banks, like Wachovia and BofA do them?

I'd like to continue to buy and hold especially at these prices, unfortunately don't have a pile of cash sitting around. Was using hard money but the refinance is tough with appraisers now very nervous about values and having potential lawsuit against them.

Edited: 06/26/2010 at 10:31AM