My business partner and I have started a REI company in the Charlotte area. We are looking to turn over some properties and hold some for appreciation and rental value. This post is in reference to the turning over facet or flipping. We have procured nice funding to cover ops and "skin in the game" costs, etc. What we are having a tough time with is finding a true HML that value deals based on the deal.
I have contacted approx 8 regional HML's to find that they are still basing loans on personal finance, personal assets, credit scores (ours isnt bad). Are they're actually any HML out there that base on a property value or the value of the deal itself? We have the cash to handle the down payments and such.
We work with a lot of investors in the Charlotte area and, as the saying goes, "money always finds the deal". If you have a great deal, you should certainly be able to find the money.
However, most HML will require personal guarantees until you have a successful track record, naturally. So, no, those requirements are not unusual when you are first starting out.
If you haven't already check out your local REI, every time I go to ours here there are a few in the room.
Yes, there are a few National HMLs that are True Asset Based Driven only.
With that said, maybe your focus should be on raising additional Private Capital in your local region. If you were able to have "procured nice funding...", then maybe you are on to something :)
To answer your question though, yes there are./
The field seems to have changed, @John Hughes . Many hard money lenders obtain their funds using mortgage pools and/or by selling their notes. The public, who participates in this, generally doesn't just want the safety of the asset behind the loan, but also expects the HML to qualify the borrower using conventional criteria such as FICO scores, personal assets, bank statements, etc. In some cases, state law requires more diligence, but these are generally business purpose loans and much less restrictive than those involving consumers.
This is not to say that there are no direct lenders out there (i.e. those who loan their own money), who don't have to follow self-imposed rules and can be more flexible and more competitive, if they choose. These do exist.
As you've found, calling large regional lenders can be an effort in frustration. Smaller direct lenders, local to your area, are most likely your best bet and the easiest way to find them is at the local real estate clubs. A good club will attract lenders of all shape and sizes, who are knowledgeable of the area, more flexible, and with the freedom to be more competitive than some of the larger regional HMLs. Meetup.com is a good place to find these clubs.
Look at Lima One. They are based in NC I believe.
Lima was one of the ones I contacted. I am parsing through REI groups and clubs now. Sounds like a good place to continue the search.
Hi @John Hughes
I would tend to agree with Jeff S Na above. The regional hard money lenders can be a huge pain, particularly for people starting out. I have just come out the other side of a torturous 3 month process to get a hard money loan for a beach condo in St. Petersburg. We are sticking with private lenders for the next few deals as it is much more straightforward.
It is far less onerous (although not necessarily cheaper) to target direct lenders in your local area. You´ll still need to charm them and present them with professional brochures prior to funding including deal summary, financial breakdown, detailed renovation budget, suggested loan terms, local market comps and yes, a personal guarantee.
Keep plugging away buddy. If you´re finding good deals and you have the skill to turn them around at a profit then the funding process will get much easier over time.
Get the Ultimate Beginner's Guide
Sign up today to receive the popular eBook for free!