Private Lending/ Hard Money Lending

[Corey Roark]

Can anyone tell me about Hard Money Loans rules/regs/laws?  How to become one? Do you need any license or do you have to register with anything?  Would it be easier to just call myself a Private Money Lender?

[Jeff S.]

Don't think that because you call yourself a Private Lender you can cut corners or play loose with the rules. There is absolutely no difference in what you title yourself, @Corey Roark. You still have to comply with all state and federal lending laws and they don't care what you call yourself. Also, be careful with all the solicitations you will receive now that you posted publically that you have money to lend. It's hard to tell your real estate or finance background since your profile is almost blank, but be careful.

This question has been asked frequently so you might do a search. Rather than rewrite history, here are a handful of threads that might be useful to you:

I would like to become a Hard Money Lender. Any resources?

How to become a Hard Money Lender?

Hard Money Lending – Becoming an Investor

Note too that many of these link to other related topics.

A few of us detailed our process step-by-step in the first thread, which I hope is helpful to you. It's still about 95% accurate for us. Now that this segment of the industry has become more competitive, there could be pressure for you to play a bit more freely when creating your lending criteria, in order to compete. Don't succumb. Real estate is also heating up (or already overheated??) so you want to be doubly sure your loans are safe.

Safety to us means never loaning further than we can drive to see all properties and never loaning to anyone we don't know, like, and trust. Obviously, that means loaning locally and meeting and getting to know your borrowers. It also means making sure your borrowers have a great deal using a conservative valuation, as well as adequate skin in the game. Unless you have access to an extraordinary amount of money that must be deployed, I'm sure there are enough homes in the Denver area to keep you busy.

My understanding is that lending laws in Colorado are rather lenient. This can work against you, not only because the barriers to entry might be low, encouraging competition, but also because you might be lulled into unsafe loans that are too easy for you to make. First, make sure you understand basic lending law and licensing requirements from a good lending attorney. Then, if I were you, I'd approach some of the larger hard money lenders in your area, learn their criteria, and possibly buy some of their loans before I stepped out on my own.

Good luck, Corey.