We are currently a hard money broker, and I have been really thinking about branching out and wanting to know what we would need to do to become a direct lender , any suggestions ?
Sure, you have to have your own capital.. get licensed in the states that require it.. I think GA does require license to broker money.. maybe wrong.. license is not tough.. then you get your NMLS registration done.. and your good to go.
most folks doing this will either have a wall st.. connection were the VC will put in say 50 to 100 million.. and take some control of your company or oversight..
the other way is you do a PPM and raise the capital through private accredited investors..
then the third way is to get a credit facility at local banks and they will back fill your loans. ( this is what I did) this is for every 1 million you have in cash they will give you 4 million line of credit.. of course this takes having the cash and having some pretty significant experience and balance sheet.. we had in the day 30 million in credit lines.. through 4 banks.
bigger players can get 20 to 50 million dollar lines from Credit sussie ext.
Then you can just broker private folks money.. and make a broker fee.. they put up the money one off as the loans come in.. I ran a company that did this back in the 80s but you need a big pool of investors.. we had 40 to 50 million in private investor money that we brokered.. but it took Mr. Langer 40 years to create that pool,
And the lendinghomes of the world will vette folks to bring loans that they fund and they usually want you licensed but that may have changed.. and you can make a point bringing them loans.. correspondent is what they call it.. I get called all the time from the various companies to do that.. but its too much work for just a point at least for me..
but if your in a market that has 300 to 700k loan balances that can be 3 to 7k per file.. and its better than trying to wholesale houses that's for sure if you get some steam and loyal borrowers.
Which bank lends you $4m against $1m down for hard money?
Do you have a referral?