California Hard Money Lenders: Getting the Trust Deed Investment Closed
Happy New Year, and THANK YOU to all my fellow BP posters and/or readers.
As it gets cheaper, with hard money at 8.5% - that's the interest rate on loans for apartment buildings, (California loans for investment, not consumer purposes) more people are using hard money lenders as a source for financing rental or investment properties. (When, of course, they can't get the 3.5% bank money.)
The challenge is this: Many loan officers and real estate agents don't "get" hard money lending. They either think it's all 12% and you deal with guys with huge pinky rings and gold chains, or they think it's from Mars.
But how do we get past this stereotype?
In truth, the guys with pinky rings and gold chains are still trying to make their 12% loans, but there are others offering more realistic rates, but they also want a better quality loan. Costs have dropped as well - the apartment hard money loan closed at 8.5%, with no points or fees, and the lender paying escrow, title and recording for borrower. And among better California private money lenders, the days of making a "loan to own" are gone. Legitimate lenders are in the LOAN business because they want to LOAN, and get paid back with money, not trustee's deeds.
Many have not learned that hard money isn't either good or bad, no more than paying all cash for a property is either good or bad. It's an OPTION that has to be evaluated, not just labeled without analysis.
My question is, what ways would you suggest to better educate or explain this to real estate agents and loan officers? (When I say loan officers, I mean the type that do mainly bank/insitutitional loans) Real estate agents and loan officers are HANDS DOWN, our biggest source of business. Some of them "get it" and really understand when to bring the client to a private money lender or hard money lender, others - could make more deals if they understood this.
Would really appreciate your suggestions and input. Thanks in advance!
Joffrey Long
P.S. Nothing really wrong with pinky rings or gold chains - just used the expression because of the movie!