Are all hard money lenders this bad?

[Ishmael Lopez]

Kiavi changed my appraisal 3 times and the last time was 5 weeks into it, I of course walked away. Lima one wasn’t transparent with their processes, and I just heard finance of America is getting pretty bad. Are these guys all just legal scammers? Or are there some good guys in this industry. If there are please feel free and share companies that you’ve had clear transparency and great communication. Thanks!! 🙏🏼 

[John Oleary]

@Jay Hinrichs that was typical back in 2010-2013 but not when money was so cheap. I just haven't seen anything that high in a long time, but I will say investors are willing to pay for speed. The great thing about PML is you set the terms so if it's working for you don't stop. The HML are lower in cost but might have more red tape than you.

[Nathan M kiefer]

Quote from @John O'Leary:

5 points and 15% is insane. 

Agreed!

[Caroline Gerardo]

Quote from @Dylan M. Davis:

There are 3 types of lenders in this market: The lender that's still open, the lender that's restructuring (good luck closing on time), and the lender that is completely out of business...

 Borrowers must adjust expectations to current market. Terms and conditions are getting tougher, rates higher, values lower. Over a million people laid off by company bankruptcy or closure in mortgage and vendors. 

@Ishmael Lopez why  five weeks in process for a loan? The three lenders you mention generally close in two or three. I assume you tried to arbitrate the appraisal after it was completed? There are great lenders still active.

Kaivi loan programs not that similar to Lima 

As a Borrower you need to be exact in your profile request or get a mortgage broker to help you through the process. 

Here are the bullet points you need to start with on day one. 

You are an: investor with experience or newby

Property city:

Loan amount wanted:

Loan to value /appraised value when complete:

number months needed:

Your mortgage middle FICO:

Is this a purchase/refinance/construction/rehab/... what?

What needs to be done

Market rents not STR

Exit strategy 

If you provide grey area answers you won't get to the finish line. If you were planning to do this in California here is who I would call-

Equity/ Diversified/ Golden Gate/ Accolend/ Civic/ Lima

In an email you summarize exactly what you want and in 24 hours they say we do or don't have a product match. 

A mortgage broker cuts through the process as they see your truth up front and guide you to a match, they add a fee but gets you to the finish line and explains the facts.

If you really need a hard money lender that's another rung - generally you need 40 -50% down and a project that they like enough to take back. For all loans you need to have the exit plan and be organized sending your pdf not phone photos of your documentation.

[Grant Smith]

I'm definitely biased as a local hard money lender, but I highly recommend networking with your local private/hard money lenders and only going the national lender route when the loan size is too large for the local guys.

That issue with national lenders changing the appraisal and thus, your loan quote shouldn't be adjusted more than once unless your loan close process takes months. We quote borrowers based upon what they tell us with the purchase price, rehab, and ARV and then perform our BPO.

Once our BPO is done then we present final terms. That's it. If borrowers accept, then we close in 5 - 7 business days. The local guys will know your market, underwrite quicker and usually will be more aggressive with LTVs because they know your market.

You can find some local lenders at your real estate investors association.

[Sasha Mohammed]

I suggest you reach out to a Broker for these loan types. Rehab deals/ ground-up construction deals can be finicky with many moving parts. A Broker is better suited to be able to identify the specific needs of the project, potential hurdles, and your goals... and then match you with the RIGHT lender for your specific needs. there is no one size fits all. 

WE (as loan professionals) also run into these same hurdles your'e talking about (evolving market/ terms, lowball values, etc) but we're better suited to work through them with MANY deals under our belt for experience. We also insulate you from that headache... that's what you pay us for. 

I had a deal i ran through Kiavi recently, and of course they chopped our value. It took me 3 weeks to get them to justify the value we expected, and eventually they came around. My client had no idea there was ever an issue, so he had a good experience working with us and we closed on time with "no headache" as far as he was concerned. 

Point is, the gray area that is hard money or private money lending can leave a lot to be desired. I also get frustrated, but it is part of the process. if it were easy, everyone would be doing it. 

Do yourself a favor and reach out to a mortgage broker. 

[Andres Saias]

It looks like you had a rough first time with hard money lenders. Every lender has its pros and cons. My recommendation is to shop around and ask all the right questions. Don't just ask for the rates and closing costs; ask questions about the process, options for extension periods, how the company operates, etc. If you feel a lender isn't transparent or your instincts tell you something is off about the deal, look for another lender.

Use local lenders that know your market. Another option is to use an experienced broker, this will make your closing costs a little higher (they charge commissions), but they know the industry very well and can help you get what you need.

You should also take into consideration that guidelines change and problems come up, however, a good lender should be transparent and offer possible solutions, and if there aren't any, be truthful and apologize for the inconvenience.

[John Warren]

@Ishmael Lopez these types of loan programs are drying up like crazy right now because a lot of folks here on BP think that hard money is a substitute for no money. All of the programs that finance really high LTC on purchase and acquisition for newer investors are getting clobbered right now. The hard money lender I use just tightened up to 80% LTC on purchase and acquisition, and I would still use them in the right circumstances. 

[Robin Simon]

Quote from @Andres Saias:

It looks like you had a rough first time with hard money lenders. Every lender has its pros and cons. My recommendation is to shop around and ask all the right questions. Don't just ask for the rates and closing costs; ask questions about the process, options for extension periods, how the company operates, etc. If you feel a lender isn't transparent or your instincts tell you something is off about the deal, look for another lender.

Use local lenders that know your market. Another option is to use an experienced broker, this will make your closing costs a little higher (they charge commissions), but they know the industry very well and can help you get what you need.

You should also take into consideration that guidelines change and problems come up, however, a good lender should be transparent and offer possible solutions, and if there aren't any, be truthful and apologize for the inconvenience.

 This is rock solid advice.  When it comes to mortgage lenders, not just hard money, all of the loan products, rates, points etc are generally going to converge to about the same so whats really important and effective is to focus on a lender that you can trust for the long-haul with reliability and service that you can use over and over as you build a portfolio

[George Despotopoulos]

Quote from @Ishmael Lopez:

Kiavi changed my appraisal 3 times and the last time was 5 weeks into it, I of course walked away. Lima one wasn’t transparent with their processes, and I just heard finance of America is getting pretty bad. Are these guys all just legal scammers? Or are there some good guys in this industry. If there are please feel free and share companies that you’ve had clear transparency and great communication. Thanks!! 🙏🏼 

 Are there good guys in the industry that are transparent and have great communication?! I think so...but I may be biased, so to remove that bias, I'd suggest going to the Hard Money Lender Directory. Here's a link: https://www.biggerpockets.com/... If you're on the homepage and you refresh it, you'll see some lenders that are featured. You can also search by state. There are some lenders with a ton of reviews/feedback from BiggerPockets users. I wouldn't stop there. Check out google reviews, trustpilot, etc.. Then if that lender looks good based on these reviews, they should be able to pick-up the phone, so give them a call and gauge their level of competency/communication. Compare that to the others you've spoken to. 

I'm also going to disagree with suggestions of local lenders > nationwide lenders, I think those are self-serving. There are nationwide lenders that know your market just as well as a local HML but honestly they don't need to. It's just like having a lender that is a real estate investor themselves. That's all great. Sure they know your perspective. But having an expert or industry leader on/in the debt space is much more important. Same goes with local vs nationwide. If a nationwide lender has a solid process, communicates requirements, reviews the scenario in-depth and thinks ahead of any issues then it's just about going through the steps.