How to get into hard/private lending game?

10 Replies

I am looking to get into hard/private lending business. I am willing to buy or partner with an existing company or to start my own. Any advise is welcome. 

it's really not that hard... go to as many REIA meetings as you can, stand up and tell them "i have money to give out, do you need money?"

after a few meetings, people will come by and ask "i have a deal, give me money".

you are welcome.

I would no reccomend lending without first fully understanding the ins and outs of hard money. I am an investor in New Jersey. I uuse an excellent lender Anthony Susco from Ashmore Partners. I am not sure he is looking for additional funding, but he pays I think 12 to 14 percent. He manages the relationships you just get paid. He also allows you his investor partners to use his contracts and contacts  to do their own lending if they want to. one of my business partners does some lending with him. If you are interested I will make an introduction .

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I don't know any lender that  lends 100%. nor do I think I would want to be that leveraged.  Anthony is on bigger pockets. just let him know I referred you.

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There is investing in hard/private loans, and there is owning and operating a hard/private money lending business.  I think the OP is referring to the latter.  Of course, there could be some crossover.

In the hard/private lending business, as in the mortgage business as a whole, there are brokers, there are lenders, and there are brokers who attempt to disguise themselves as lenders.

I will assume we are talking about lenders.  Lenders in this field operate in one (or more) of four ways.

1. They lend their own capital

2. They lend capital they have borrowed from lending institutions or private equity funds

3. They lend capital raised from individual investors

4. They utilize crowd funding to secure the capital needed to finance a loan.

A broker, marketing himself as a broker, and acting as a broker can provide a valuable service by finding a borrower the most suitable financing ( or in some cases any financing at all), advising a client on how to make the best presentation, gathering needed documents, putting together an attractive loan application, and explaining and advising their client on the positive and negatives of any particular loan offer.  My experience in dealing with brokers from a lenders perspective is that the best brokers provide there services; however many do not and just act solely in their own best interest trying to make as much compensation as possible on each deal with the least effort and time commitment.  Some have no client contact at all acting as middlemen for other brokers just passing along documents hoping to catch a point or two ( or three ) in the middle.

The scariest situation for any borrower to be in is to be involved with a broker who disguised himself as a direct lender.  Some of these characters are even able to convince lenders they work with to table fund loans in their names so that they can provide "proof" to borrowers that they are lenders.  This misdirection often allows them to collect upfront fees from borrowers who believe that the fees are being paid to someone with the authority to approve a loan, which is not the case.  Additionally, borrowers dealing with these brokers believe that they all but have a loan secured when in actuality the loan application is being shopped around in hopes of finding a real lender.  Further, the pool of potential real lenders is reduced since many lenders refuse to deal with these brokers who disguise themselves as lender either because they regard their mo as unethical or because of previous bad experience.  

Be sure to decide whether you want to be an investor or a business owner/operator.  For some reason the terms are not as well defined nor as well differentiated as they should be in the real estate field.

@Don Konipol another superlative post !!!

I now call these joker brokers pump and dump due diligence thieves  BP is rampant with them, so if facebook and LinkedIn .. its tough for the poor borrower to figure out who is real.

@Ashfaq Sheikh yes it's not really as easy, as @George P. Says but basically yes, I have done a few deals my own money, here is how I did it.
I started doing flips using a Hard Money Lender my family new.
I grew my my equity, and all does Wholesalers, flippers I new from the flipping deals, And started sending email of my rates and deals etc and boom got a lawyer got a good contract and Done 3-4 HML deals even do its not my stronghold it's a great source of income.
Experience is indispensable ?
Have you done many deals ?

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