Painfully basic question

[Jeff Ashachik]

Hey guys,

I am trying to learn more about hard money lending and I'm stuck on this very low level question that i'm almost embarrassed to ask. Almost.

What exactly does "Having a deal" mean?

I've been reading/listening about hard money lending and I hear a lot of "don't go to a lender without having a deal". Does this mean you have to have submitted and offer that's been accepted? or just a verbal agreement like "yea, I'll sell you my house for this much"? or just seeing a property that looks appealing on the MLS?

thanks! Can't wait to look back on this post and say "Wow, that's embarrassing"

[Chase Maher]

@Jeff Ashachik Don't be embarrassed, thats what BP is for. Connecting all types of investors (Newbie, Beginner, Experienced, Pros) in a social platform with zero judging!

As for your question, and this is my opinion and should NOT be taken as the only correct answer, having a deal means anything from a prospective property to having one under contract. "Having a deal" ALWAYS means don't go to a HML without at least having a prospective property that has the spread (Acquisition Price > Rehab > Exit Price) that they will lend on. HML's are asset based lenders. There's a saying, if a HML won't do a deal, its probably not a good deal.

Most HML's prefer to work with borrowers who already have a deal under contract, anything other than that is preliminary work that 99/100 times doesn't pan out. What I have realized, as a lender and investor, that "wasted" time is not wasted at all. Its a learning experience, building relationships and gaining trust.