DoHardMoney.com / other hard money lenders.

30 Replies

I’m looking into hard money lending companies, also working on building relationships with possible future investors or lenders. I came across DoHardMoney.com and am qualified for a loan. I talked to them and they said after the deal when it’s time to pay back; the only way they make money is from interest and points solely. So what I am asking is what is a typical average rate that would make sense on a deal. And what rates and points should I watch out for as a big NO! Thank you!

Hey @Darren Nardo , there are lenders out there that price loans on no points, "PAR Rates". Really the best way to find out comparable rates is to take a look at the Marketplace here or call around to different lenders. 

Best

Tim Wolfgram

there is a publication called Scottsman guide.. this will list a lot of the top lenders.

keep in mind HML want to see some experience and skin in the game to get decent rates. DHM from what they say will give you a lot of leverage although from what others have posted about rates they are the very highest in the industry and for sure if they are going to risk begineers with little to no money into the deals that's what they can command.

they also charge 3k for their study guides which used to be mandatory but from what we are hearing on BP its now optional.. 

here are some regional lenders that are for real.

lendinghome

visio

Conventus

Lima one

Lending one

and then you will have local lenders I like to go local when I can but I have done business with all but lending one .. and they all have their pluses and minuses..

@Darren Nardo there has been lots of discussion about them on BP - you can see dozens of threads dedicated to them, as well as their responses to a lot of the posts, and different member's positive and negative experiences. That should help you decide!

Yeah there are lenders that want skin in the diamond. Many say 65% of arv. Meaning lets say a deal arv is 100k that is 65k. Meaning if you could get a deal under that it is covered . problem is most dnt know how to get low enough. My first three deals I just had to put up 3k, I couldn't go over 250k pp and 50k rehab, could do 3 deals at once. Once complete I got all my money back but 650 bucks, that was for appraisal. Ever since then I got low enough with junk fees rolled in and everything to get for 100% financing. If lenders feel like they have nothing to lose they will fund 100%. Like I said if you get a deal for 25 cents on the dollar, with not much rehab on a deal worth 100k at very least you dnt pay they get a deal with great equity. Win win for them. If you are asking for 75k on a deal with 100k that is more risk obviously, therefore, they would want skin. Let's say if everything came back and you needed lets say 2500 for junk fees you can always go back to owner and negotiate that 2500 to make it truly 100%. Most likely homeowner wnt mind not a big deal to ask for a drop the equivalent to your added fees

@Jay Hinrichs I appreciate you responding on both my posts jay! You’re the man. And I definitely figured it would be difficult since I don’t have much experience but i definitely have money to contribute. I’m thinking for the future not now so whatever I have to do to get there. I will definitely Make calls to your recommendations and find the best fit. Thank you!
@John Webster I’ll remember this for sure thank you. They offer 70% ARV. And make their money off points and interest. So I’m just going to do more research and find what fits the best!

@Darren Nardo    The $3000 up front is ABSOLUTELY NOT MANDATORY It never has been. I'm going to be doing my first flip by myself in January 2019 and I will be using Do Hard Money for my financing. Yes their rates are high but without any real experience to prove this is the route for me. They aren't for everyone and I AM NOT signing up for their educational system, which looks incredibly valuable, I just want to save the money I have for closing costs and any down payment I might have.  I can assure based on all my communications with this company and speaking to several people who used them multiple times They are legit

@Christi Hawkins   Chrisiti here is a copy of  a PM I got form someone following this thread

Hello and hope all is well. I did a preapproval from do hard money today, and the $3k is mandatory. They will not move to the next step of qualifying your propriety for the loan, if the contractual agreement is signed that uou will pay $3k for tools that’s include access to a app that shows all pre-closures, foreclosures etc mapped geographically. While I realize this is the only skin in the game required in exchange for them financing 100% property and repair.

My fear is that I’m not comfortable with not knowing ahead of time If They will qualify my deal-or if the $3k will be lost is I don’t get qualified To move forward. Risk might not be worth loosing $3k.

I’m in New Jersey and don’t have any reliable probate Investor’s as I’m still networking and meeting rei’s. Can you provide a few suggestions.

I decided to pm you as just as some feel others that praise DHM are advertisers, I certainly didn’t want raise doubt for all viewers, as I have no proof one way or another.

Thank you advise is helpful.

So Christi looks like this person did not have the same experience that you did.. as you maybe a tougher negotiator I suspect they are very good at what they do on the back end 

@Jay Hinrichs    I promise you that is not true. This person, with all due respect,  may have heard it that way and I'm sure the company would really like to know with whom they spoke because having just been through the process I can assure it is not mandatory. I'm glad you shared this and with this person's permission and not divulging anyone's name I'd like to copy your message and send it to the person I've been working with. I was very up front about all the negative things I'd heard about them and she was also aware. We spent quite awhile discussing that before we even got to loan options

Originally posted by @Christi Hawkins :

@Jay Hinrichs   I promise you that is not true. This person, with all due respect,  may have heard it that way and I'm sure the company would really like to know with whom they spoke because having just been through the process I can assure it is not mandatory. I'm glad you shared this and with this person's permission and not divulging anyone's name I'd like to copy your message and send it to the person I've been working with. I was very up front about all the negative things I'd heard about them and she was also aware. We spent quite awhile discussing that before we even got to loan options

 I redacted her name for privacy but you can tell I cut and pasted that.. and yes .. the owner of DHM  has gotten on here and said they no longer require the 3k up front.. but then I get these PM's saying its not true.. so that leads to me believe they may size up who they are talking to and tell different stories to different folks??  I know when I do deals I custom create terms for my folks and not all terms are exactly the same. .. remember this is total beginner borrowers who don't know what they don't know that is who would respond to a no money down 100% loan.. with the highest rates in the industry right now.. ( which I totally get and would expect for the risk they ultimately take when and if they close a loan for a beginner with Zero money down..  Maybe Jacque will pop back on and again confirm that they no longer make it mandatory to buy there APP or information package.. and AGAIN I am not anti guru or information selling by any means I have done tonnes of business with Gurus over the years and the back end fulfillment companies that run them that are like DHM all based in Utah.. its an industry there in the Provo area.. ITS huge money for those fulfillment companies as in private 30 million dollar jets HUGE>.  I get it..   ( PS wish I had one a jet that is  )  :) 

@Christi Hawkins   Much like the auto industry  do we think everyone pays the exact amount for a vehicle .. do we think someone who sits there and grinds away for 8 hours might pay a little less than someone not as familiar or as good as another in grinding the salesmen the manager who gets the hand off and the close.

this is why I LOVE Tesla you buy on line price is the price for all of us.. and it takes exactly 3 to 10 minutes to buy the car.. its GENIUS.. and why its such a threat to big auto... if you have not been on the Tesla site check it out see how easy it is to buy a car.. the finance part is auto matic too just put in name rank serial number and your approved almost instantly..

you do need to put 2500 down on your credit card then they configure and produce your car.. I have bought two  my daughter is getting hers this week and I have sold or referred about 5 or 6 buyers to the site who ended up buying one. 

Just like I refer borrowers all the time to the top HML companies that I know wont rip people off .. and don't take up front money and actually fund the deals .. of course you need 20% down.. but if your in mid west that is usually 10 to 20k maybe 30 to 40k.. and frankly if you do not have that amount of liquidity plus reserves the last thing you should be doing I trying to flip houses... Lastly do you know if DHM requires a personal Guarantee ????

@Jay Hinrichs   I completely agree and wouldn't work with a company who told someone one thing because they thought they were too stupid to understand just to make a buck. I was in the car business during the 90's ( jeez, I just dated myself) & still feel guilty about the things I was told to do. It made me sick but I sure did like that paycheck & driving a new car all the time. I objected a couple times once a customer got to my office to sign the documents and they shared with me what they had been told. I'd walk right up to the sales desk and ask them if they knew the person in my office had been lied too and in every occasional He told me to shut up I wasn't their mother and do what you're told. Once I got out of that business I swore I would never be a part of anything like that again and still have a disdain for company's that operate that way. The days of "hard sales" practices have been over for a long time. People don't want to be "sold" anything They want to be "educated" with all the facts and they'll make a decision based on those facts and if the product is beneficial to them.   I'm not sure how we do this but I'd like to get to the bottom of it right now and either get a direct response from them or someone who has worked with them can tell us one way or the other

@Jay Hinrichs I can only speak for myself but they did not require a personal guarantee. They are going to create a specific LLC for the property

You mentioned Jacque, I've seen her comment but don't remember her last name. If you do, get her in this because I'd sure like to know one way or the other. If I ran a company and this isn't true I'd be upset if it is true then she can just come on here and tell us

Originally posted by @Christi Hawkins :

@Jay Hinrichs I can only speak for myself but they did not require a personal guarantee. They are going to create a specific LLC for the property

this is interesting THEY are going to create the LLC.. who are the members are they a member?.. so if you fail they don't have to foreclose? that would be a good way for them to do this.. so its really not a loan its a JV of some sort with no mortgage. ITs common for HML to require a LLC to loan to so its clearly a business purpose loan and not run afoul of DF.. But pretty much every HML will require PG's as well.. but if they have a mechanism to get the property back without a foreclosure then maybe they don't need it.. and frankly with the no money down borrower with limited capital the PG is kind of worthless anyway..

again just spit balling here.. but in mortgage states like OHIO were foreclosures take a long time..  to loan 100% no PG and such that would be highly risky.. some lenders will force you to sign a DIL at closing that they hold .. then if the loan goes belly up they just record it and don't have to do the full Maryann foreclosure.. 

Once you figure out exactly what they are doing or how they structure these it would be a nice service to post about the actual set up .. 

ON to car dealers LOL.

So I am sitting in the finance persons office while they try to up sell me on everything under the sun.. the one they were really hammering on was gap insurance.. IE you drive off the lot with your 100% financed car and it gets totaled and insurance only pays you value not the loan so you could be responsible for 10 to 20k of the difference between new car price and used car price.. I thought oh let me look at that insurance.. so I read the fine print..  well if you have had your license suspended for any reason in the last 3 years of buying this insurance its void they wont pay.. so I tell the salesmen Sorry I had my license suspended last year ( we have these stupid red light cameras) and I said the gap is no good for me.. the guy kept on hammering away to get me to buy it.. I finally said enough.. just write up the paper work I am not buying any add ons NOT ONE thing.. or I will just walk out.. LOL  

@Jay Hinrichs   I do have another question for you, I know I want to do my first flip in Columbus, OH and I've narrowed it down to a few zip codes I like. For my first flip I want to start out small and find something that just needs cosmetic work. I understand I might not get that lucky but unless the house is in the worst neighborhood ever should I concentrate on the right flip for me and not worry if it's not located in my target zip code

Originally posted by @Christi Hawkins :

@Jay Hinrichs  I do have another question for you, I know I want to do my first flip in Columbus, OH and I've narrowed it down to a few zip codes I like. For my first flip I want to start out small and find something that just needs cosmetic work. I understand I might not get that lucky but unless the house is in the worst neighborhood ever should I concentrate on the right flip for me and not worry if it's not located in my target zip code

OK Christi great question.. and here is going to be your challenge.. how are you going to source this cosmetic flip.. wholesalers ( rampant in those markets) or off of MLS or are you going to direct mail or drive for dollars.. or get on a site like auction.com or go to the sheriffs sale. ( which will require cash up front then refi through DHM)

I think your challenge will be finding something that only needs cosmetics at a LTV that DHM will actually fund 100% is suspect they use their own appraisals or valuations and if I was them I would be uber conservative.. out of area lenders are usually very conservative on values. so the challenge will be finding anything that will fit into the formula. especially just a cosmetic fixer..

You want to be very careful as well as neighborhood as U know when the values go down the risk goes way up.. and the risk is having your vacant home broken into and everything stolen. 

Make sure you have a clear understanding of what LTV they will lend before you spend money on their submission and appraisals which I believe is 600.00 per deal from what others have posted.. some of the past post's the folks spend 2 or 3 submissions plus the 3k and nothing was ever good enough or worked for DHM so they lost that money.. this is were a local lender will save you the time and aggravation of failed deals.. keep in mind the wholesalers uniformly want 2k non refundable.. and or your going to have to put up EM at some point .. so you need that money.. you don't want to lose it because your lender backs out.

Anyway those are a few things to keep in mind.. right now finding properties at 70% ARV minus repairs is pretty tough to do.. and virtually impossible for a beginner UNLESS they are willing to spend thousands on marketing and go direct to sellers.

@Jay Hinrichs   That is hilarious and very common. I hated trying to sell that stuff because none of "the insurance" ever paid and I was the one they were standing in front of having just come from the service dept where our service manager just told them that $1500 warranty you bought doesn't cover that. FYI, they inflate the costs on the warranties as well, depends on the year, make & model of the car but each one has a different base cost and I could charge whatever I got away with and the dealership profited the difference. The very worst thing and the reason I stopped ever trying to sell any of it and then got out of the business was a woman came into my office and told me her husband purchased the Life Insurance policy I sold him to protect her in case anything happened to him. He was healthy but died unexpectedly of a heart attack and the company refused to pay off the car due to some technicality I cried the rest of that day and decided at that moment I was out of there, I couldn't live with being a part of that. 

Back to the LLC: this is how it was explained to me. Yes, they create a specific LLC in which I am the managing owner. There is a Mortgage filed & recorded with the county recorder. In the event I'm a big fat failure they can foreclose by doing an SPE (Special Purpose Entity) Transfer of the LLC in which they become the managing owner and it doesn't affect me personally. My credit doesn't suffer or will there be a record of FC on me personally. Frankly, I like this way of doing it because if I am a big fat failure the only thing I lose in time & money but would live to fight another day

@Christi Hawkins   OK I get it now.. I was wondering how they did that..  

keep in mind NO HML reports to your fico.. so there is never a risk of credit ding..

and foreclosure same thing that would never come up on your credit from a HML or private lender.

the reason HML don't report to fico is we ALL have bad loans and once you report a late the chance of your borrower refinancing just went out the window.. if you take on FICO as a lender you MUST report 100% of your files. so its just NOT done in the HML world.. So that's all smoke and mirrors used car scare tactics they are telling you..

they may put a mortgage on the house but its a transfer of the LLC they are not foreclosing. you have just agreed to transfer your interest to and they take over ownership of their own mortgage.. I get it .. that works.. and probably more complicated and sophisticated than 90% of the their borrowers will even understand.. most borrowers just show up and sign were they are told :) …

So now that we get how they can possibly do this.. and again that makes total sense to me.

the challenge for you will be getting something that fits in their box.

without you wasting 600 dollar submission fees and appraisals.. 

@Jay Hinrichs Thank you so much!!! I do not want to use a wholesaler because they want too much, so I have 3 different ways I'm leaning toward. Driving for Dollars, I have found an REO agent in Columbus that is aware of upcoming foreclosure months ahead of time and my brother is a UPS driver and his route is in the perfect location to bird dog for me. That's the plan so far. Auction.com scares me to death but would love to hear someone's experience with it. We bought our home at Sheriff's sale and found an unlocked door so we did sneak in and look through it. I was also working for a community bank at the time and they were able to loan us the 10% down to purchase it and then we refinanced it once we had done the improvements required for a conventional loan.

Originally posted by @Christi Hawkins :

@Jay Hinrichs   You are 100% correct, that will be my challenge!!!!

Also when you get the loan docs and the LLC from DHM make sure you understand what constitutes a default. If this is interest accrued IE no payments .. then when is the balloon payment.. and what are you options if the home has not sold by the time the due date arises.

also one lady in Atlanta who had well publicized issue with this company.. said that she had to front the rehab costs and then wait for reimbursement.. and that became a challenge since rehab contractors usually need money up front.. and wont wait for the draws.. 

LIke with my new construction.. we submit for draws and lender funds then WE pay we never have to front a dime. 

do check that out as well.. Make sure you don't run into a cash flow issue with your contractor.. 

@Jay Hinrichs The way I understand it is this: once you close on the property they send 10% of the rehab funds held in escrow directly to you or the contractor to begin the rehab. After that they prefer a total of 4 draws and yes the work has to be completed 100% before they will pay (reason #1282 why I want to have money saved) Regarding the default issue. Once you've closed you have 5 months to complete the rehab and pay off the loan. You don't make any payments until that moment, they collect the 5 months of interest up front on the HUD. The loan technically goes into default if the 5 months are up and you haven't sold the the house, at that point you have a couple options; you can give up and give the house back, you can make the extension payments which are HUGE and a big incentive to stay on track and get the property completed on time or you can get busy selling the house. From what I've been told by people who have been successful with them, if you utilize them as your partner, take their guidance and follow their system ( and have your own ducks in a row) the system works. If you don't you can end up on an island and that's not where I want to be, I want as much guidance as I can get from professionals who do this everyday

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