Where Do You Find Your Lenders-HML - Private?

Question

Had a chat with an investor yesterday in the Dallas area. Sounds like he is doing awesome and is doing rehab/flips about 1 a month. His dilemma is finding more HML or private lenders (call them what you wish). What sources do people have to find these types of lenders? Would there be any demand for a review site similar to @Jay Hinrichs site for reviews of turn key properties? Thanks.

John Thedford · Answer

@Tyson Hosey

Do you believe a hard money lender review site would be helpful? Where do you find your lenders? Have you seen the threads on BP concerning some HML and the very negative experiences from potential borrowers? Would a review site be helpful to weed out the companies that prey on people wanting cash? There are plenty of good companies but also plenty of dishonest ones. Wouldn't it be nice to have a site to see if there are reviews and to help you make an informed decision?

John Thedford · Answer

@Mark Allen

Great terms. Not all borrowers can get those. Besides that, some just want the quick fast money, no application, no credit check, etc.

John Thedford · Answer

I got that idea from my friend who is a real Pro who is a  fantastic role model

Jay Hinrichs · Answer

@John Thedford  love your idea and I think it would be a great benefit to the community at large..

the amount of scammers out there is off the charts.. due diligence pump and dump folks.. folks charging to get their super secret list of private investors.. etc etc.

Jay Hinrichs · Answer

@Mark Allen  I think your credit facility is a testament to your Credit standing your experience and your liquidity.. there are very few of us that can get credit facilities from banks at those rates.

And for sure you MUST be local or usually.. I did just get a 1 mil dollar facility in Charleston at 1 and 5.5 for new construction but that was after being there 3 years and about 30 homes in the books. that they could go see and I could prove we made money on each of them. our terms are a little more conservative than yours.. I pay cash for the lots and then borrow Vertical. Here in Oregon were I have forged a 24 year relationship with my banker I can get 90% of costs  land and vertical.. 1 and 6 ...

I am a HUGE community bank fan and anyone who wants to do this for any length of time I encourage to go find your banker and start that relationships up,, and then let it germinate.. I started in 1992 with my banker with my first 100k line of credit and at the peak of 08 was at 16 million and the largest barrower at the bank.. Now don't ask me about 08 to 2011.. I don't want to upset my stomach.

So in closing I say great job.. and keep up the good work its a Huge advantage to have bank funds for these deals and only paid on drawn funds etc etc.

now with my bank though they require a 3P appraisal.. to access my credit line's and our apprasiers are backed up.. but we can usually get it done in 30 days.. If I need to close sooner I tap my unsecured line of credit they gave me.  this goes to @Tyson Hosey point.. My original credit facilities were to buy court house steps.. so we needed cash on the barrel head so we started with a 4 million dollar unsecured LOC.. we used that cash to buy then we got the appraisal etc and tapped our holding line which bounced between 6 and 8 million.. it was pretty sweet.. you talk about advantage at the court house steps.. walk up with a couple milske in cashiers checks.. and if I did not use them that day the money was never taken from my account and I was not charged for it.. this is what great banking relationships will do for you.. then in the melt down of 08 that bank was the only one of 5 I dealt with that kept my credit lines in tack but they shrunk dramatically of course.. But I am right back up there today with about 7 million in credit with them to run my construction and flipping endeavor's.   And this all started with a young banker who put faith in us to loan us our first 100k.

John Thedford · Answer

@Tyson Hosey

In reality the terms are pretty much interchangeable. What matters to borrowers is the terms. Generally speaking, most HML or PML are short term lenders. My general terms are 1 year though I have written a very few at 2 years. I just registered several URL after looking at Jay's site. I talked to him and he encouraged me stating he thought a review site would be needed. I am looking for feedback which you have provided stating you believe it would be helpful. Thanks.

Tyson Hosey · Answer

@John Thedford

Sure! I think having a site like that would definitely useful. I know BP has a lot of discussion about it, which is helpful because you can hear both sides of it and decide for yourself. Do you think in my situation I should be looking more for a PML or a HML?

Tyson Hosey · Answer

I'm having a bit of the same trouble. I'm looking to secure a property with private money/HML just long enough to get financing at a small local bank. I don't mind paying high interest to a PML/HML because it would be just to keep the property from selling to someone else while I get the bank to approve it. Do PML/HML's do that? Seems like a hybrid of fix/flip money and long-term (buy and hold) money.