Experience with hard money lenders?

15 Replies

The chances are probably not very good unless you can partner with someone who has an extremely good reputation rehabbing properties in your area, that person will need to be a guarantor on the loan, and have a long standing relationship with a particular HML,

If you have those it is possible, but probably still not likely.  I would actually be skeptical of someone who would give you a 100% loan like that when you have no experience or money.

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Most hard money folks want you to have some skin in the game. I came across several that are 20% of ARV but you need to put down closing costs and/or points up front. good luck!

Yeah, I'll go with what they said. It helps to have "Skin in the game." However, there are some other creative ideas, like working with a partner who has the "skin" or by using a Home Equity Line of Credit or by finding the world's greatest deal and a very friendly/trusting HML :)

To add to @Brandon Turner 's comment. If you found a screaming deal that a lender would buy themselves (one that was a good fit for their own portfolio) they would still prefer you bring some of your own funds but they would be more likely to fund the entire deal. The caveat is that you have to be able to convince them that you are not likely to turn a property worth say $100K into a property which is only worth $50K. This will be much easier when you have a strong record of successful deals in your portfolio.

@Erin E. 

  if your talking about actual courthouse steps purchases your chances are zero unless its a close friend family etc.

I do a little of this but would only consider the absolute most experienced players.. way to much can be missed buying at auction.. Also you have to remember most HML need to have a lien position at close and title insurance you get none of those at the courthouse steps auctions.

If you have no personal capital it pretty tough getting started.. trying to scout deals for those with capital is one way to go.. working with a top producing RE agent can be fruitful as well.

Logistically this is difficult. Most private lenders will want to have a mortgage or deed-of-trust filed against the home when you close. Not to mention insurance. Their funds will be wired to a title company who will hold them until these documents are record and then paid out.

I don't know Arizona, but when you buy at a trustee sale (i.e. a foreclosure auction) in CA, you are generally required to pay everything up-front, then and there, with a pile of cashier's checks. It might happen on the TV flip shows, but few HML's are going to give you a bunch of cashier's checks to buy anything before their money is secured.

Jeff S Na 

  we do that kind of lending here in Oregon.. but only with the most seasoned players would not even consider a newbie...

WE cut the checques for the auction made out to the trustee companies.. then if they win both our names are put on the trustee's receipt. We open escrow and formalize the loan as soon as the trustee's deed is recorded and we can get title insurance... But we also are owners of the asset for the gap period. this is really common in Washington as well with some of the bigger HML in the game...

And then if the bidder is not successful they just return the checques to my bank.. they pick them and return.. them I charge them 250 for bid funds  whether they use them or not.

And if they don't use them I made 250 for funds that never left my account. And bank of course does not charge us for cashiers checques.. we bank at small local community bank.

if we win the bid we simply call the bank and tell them to process the checque and debit our account.

Of course it takes a quite a bit of cash or LOC to pull this off on the west coast.. one would need Millions to be in this type of business but most HML in our area are 10 million and up. IN the BAy area and LA I suspect they are 50 to 100's of million strong.

Thanks, all!!  Here in AZ, you have until 5pm the following day after the courthouse steps auction and you can buy title insurance.

@Jay Hinrichs  can I message you what I've got?  I kind of put a loan presentation together, but I really have no one to bounce it off of.  I'm probably completely out of line, but there's a learning curve with everything!

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