Do hard money

Maurice, LA · Member since 2014 · 9 posts · 2 votes

ok I am at a point where I have done my research and still learning but I'm ready to get my first deal going and get it under my belt. My credit is not good enough to get a mortgage loan. So I'm left with private or hard money. Can anyone tell me more about do hard money.com. Are they really a good deal or not. I really hope I don't have to wait till I get back from overseas to have 100% of my own funding. Any advise would be greatly appricated

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Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

12y

@John Cartwright

@David Beckman

Any lender that charges money up front ( other than modest credit pull say 50 bucks) and for an appraisal. is not one you want to waste time with in my mind. There are many lenders or company's that just make money telling you you are pre approved but we need 2k for DD or some horse stuff like that especially bigger commercial deals. Although lending is strictly regionalized what one hard money lender does in your neck of the woods and what one does in mine can be far different. The day of just lending on the asset is really gone with most of the company's that have been in bizz for any length of time. they will underwrite a file but will want to see decent credit, tax returns and experience etc etc.. We do a true NON recourse loan but its at 50% of cost, and the home has to have already been rehabbed and in great shape, No straight LTV loans for me to much hanky panky in that arena.

Also go to the Scottsman Guide there will be a whole list of reputable lenders there I would start with that one.

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Dev HornPro Member
Flipper/Rehabber · Arlington, TX · Member since 2013 · 1k+ posts · 2k+ votes
12y
I have not used them, but we've met Ryan Wright and he seems like a very legit guy. I have a hard money provider I work with sometimes here in DFW and they can provide proof-of-funds letters anytime, so I'm not sure if you need a service for that part but it may be a good option for some.
0 Reply
Raphael J.
Realtor · Kansas City, MO · Member since 2012 · 25 posts · 4 votes
12y
I tried DoHardmoney.com and all they wanted was $, but could not produce $ for me so I passed on them.
3 Reply
Raymond B.
FL · Member since 2009 · 2k+ posts · 357 votes
12y
@John Cartwright

I suggest that you take the time to use a search engine concerning DoHardMoney.com. It seems that a lot of people are NOT happy with that Company.

Raymond
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John Cartwright
OP
Maurice, LA · Member since 2014 · 9 posts · 2 votes
12y
that is what I have been picking up. I meeting with a mentor today and really hope to find out some good information on financing. My credit is not allowing me to get a mortgage loan but I know I will be good at real estate investing. I just hope that finding financing slows me down.
0 Reply
Vance Petersen
Lender · Las Vegas, NV · Member since 2013 · 15 posts · 16 votes
12y
My 2-cents would be to talk with several licensed hard money/private lenders in your state in regards to their terms and begin to develop a relationship. Most are solely equity based financing so your credit will not play a factor in their decision making. Local lenders might have more favorable terms for your specific area than a nationwide hard money lender with blanket programs/terms. Treat money lending like contractors, get several bids. It will help if you have a specific project/deal in mind to run by them.
4 Reply
John Cartwright
OP
Maurice, LA · Member since 2014 · 9 posts · 2 votes
12y
awesome thank you. Very good insight. Will do. I absolutely love bigger pockets for this very reason
1 Reply
David Beckman
Idaho Falls, ID · Member since 2014 · 4 posts · 4 votes
12y
Probably best to avoid DoHardMoney.com. I paid the $1,500, went through the training materials from top to bottom so I could determine how they like to work (I'm no novice at flipping, but every lender has their particular methods of doing things). So far, I've found them to be evasive and disingenuous. I've since found other lenders who are far easier, more efficient, much more straight-talking, and less expensive to deal with. I have funded my deal with someone else, and I'll consider the $1500 I paid DHM an idiot tax and move on.
3 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
12y
@John Cartwright

@David Beckman

Any lender that charges money up front ( other than modest credit pull say 50 bucks) and for an appraisal. is not one you want to waste time with in my mind. There are many lenders or company's that just make money telling you you are pre approved but we need 2k for DD or some horse stuff like that especially bigger commercial deals. Although lending is strictly regionalized what one hard money lender does in your neck of the woods and what one does in mine can be far different. The day of just lending on the asset is really gone with most of the company's that have been in bizz for any length of time. they will underwrite a file but will want to see decent credit, tax returns and experience etc etc.. We do a true NON recourse loan but its at 50% of cost, and the home has to have already been rehabbed and in great shape, No straight LTV loans for me to much hanky panky in that arena.

Also go to the Scottsman Guide there will be a whole list of reputable lenders there I would start with that one.
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Corey Davis
Los Angeles, CA · Member since 2013 · 169 posts · 27 votes
12y
@Jay Hinrichs You do a loan on 50% cost of a fully rehabbed property? For what exactly? I'm learning a lot about creative financing these days, and I'm trying to figure out what that type of loan would be for? Are you loaning against equity on one property for funding another?
0 Reply
Corey Davis
Los Angeles, CA · Member since 2013 · 169 posts · 27 votes
12y
@David Beckman so you paid DHM a ton of money but never got funded???
0 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
12y
@Corey Davis

our loans are 5 year loans and are for cash flow investors.. who are using their SDIRA's to buy cash flow Turn Key properties. Say they have 100k in the SDIRA and the cash flow home in Orlando is 100k each.. They cannot get financing because a SDIRA cannot have any recourse.. There are few lenders that will do TRUE non recourse lending.. So for our program and we do these with TK operators all over the country ( same goes with the foreign buyers they can't get a loan on an investment property either) We will finance 50% of the purchase price thereby allowing the SDIRA holder to buy 2 homes instead of one and provides leverage so their returns are better. TK operators love it because they just made 2 sales with the same client. We don't offer this one off we only offer it through TK operators as stated above.. Although we may look at moving into CA with the product. Norris has similar product but I am pretty sure they will lend to LLC but will want a PG.. Just like we did with the hundreds of HML I have made back in the day. I am a CA RE broker so I can step right into lending in CA when I am ready and or have the deals that are coming to me that we want to consider,, Have not tried yet though
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David Beckman
Idaho Falls, ID · Member since 2014 · 4 posts · 4 votes
12y
@Corey Davis

A few weeks ago I paid DHM $1,500, sought funding on a property, and was told that I had to pay an additional $600 for an independent property evaluation. When I balked ( I seemed to remember that the $1,500 included an eval when I signed on), I was told by that I indeed had an eval available at no cost. Then the rep sent me an e-doc to sign (that would have initiated the eval) that said, sure enough, in the document's second paragraph, that I would be authorizing them to hit my credit card with the $600 fee. When responded to the email pointing out that that was not what I was told, I received no response. Nor have I heard a peep from them since. I quickly found other financing, at much, much better terms.

These are the sort of shady tactics one would expect from disreputable used car dealer. Incidentally, I called the Utah attorney general's office of consumer affairs and was told in so many words that this company is on their radar screen. I was encouraged to file a complaint, which I have yet to do.
1 Reply
Corey Davis
Los Angeles, CA · Member since 2013 · 169 posts · 27 votes
12y
@Vance Petersen I actually DO bid out out my projects with hard money lenders the same way I do any other portion of a project. Hard money lenders are NOT loaning on value of a deal alone any more, like Jay Hinrichs mentioned, those times are over. And, frankly, more often than not, "reputable" lenders are fitting in upfront fees in the form of various business costs these days, not to mention it's coon now for a hard money lender to only loan on a project that you have a significant amount of funding for, and then compensate you as you progress.

Hard money seems to be a misunderstood product for first time RE investors. The truth is there is NO free money in a hard money deal. You DO have to have your own cash, decent credit, AND a very good spread on your project to get funded through a hard money lender on anything in the 300-500k range in my personal experience. (I've only operated in L.A., Portland, and Seattle, other areas might be different)

On the subject of DoHardMoney.com, they are often one of my resources when getting funds together in the initial phases. I generally go with other lenders because I have funds already, and don't want to pay the upfront fees they require for the pre-funding inspection $600. Though, I have met numerous first timers (in person, not on the Internet) that have successfully funded a flip through them. Personally, if I needed the product they offer, (100% financed projects) I'd put up the $600 and accept the huge financing fees, over missing an opportunity.

An insight to the overwhelming number of negative feedback on the Internet regarding that particular company, I believe, is people wanting to believe the hype of "free money", and discovering the true cost of it.

I read negative reviews for banks all the time too. All the time. Am I going to decide against using a bank because of it? Not if I need a checking account. Negative feedback is extremely useful when used correctly. Many people have majority opinions on companies, people, restaurants, football teams... Does that make those opinions facts? Nope. Just opinions. Do those huge amounts of opinions all correlate some kind of tendency toward a particular experience? Yup. For sure it does.

I've met people that have used DoHardMoney, so I know it works. Is it gonna suck for you? Popular opinion would support that.
4 Reply
Corey Davis
Los Angeles, CA · Member since 2013 · 169 posts · 27 votes
12y
@Jay Hinrichs Thanks! That's a whole new subject to put on my list! What would be the best way for me to find out more?
0 Reply
Engelo RumoraBusiness Member
Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
12y
@Jay Hinrichs

We need to schedule a call soon?

Thanks
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Corey Davis
Los Angeles, CA · Member since 2013 · 169 posts · 27 votes
12y
@David Beckman Wow, $1500 is a lot of money to lose. If I lost that kind of cash I'd be consulting an attorney.

I'm familiar with the $600 for the inspection fee, what was the $1500 for?
0 Reply
Corey Davis
Los Angeles, CA · Member since 2013 · 169 posts · 27 votes
12y
"not to mention it's coon now for a hard money lender"

=not to mention it's COMMON now for a ...

My iPhone likes to re-spell my perfect grammar...
1 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
12y
@Vance Petersen

I hear what your saying about shopping lenders.. However for me I strived to create long term relationships with my borrowers. To the point that my service is so good that they would not consider going to another lender to save a few bucks. And or if they treated me like a sub contractor I would not lend to them as there is no loyalty coming back to me,, and they would be the first ones to bolt if the project went upside down. Its the same with my bank here in Oregon been with the same banker for 20 years. When I grew to big for them ( IE I was at their lending limit for one client) I did have to find a few other banks to get LOC's from.. But when the GFC hit.. those other banks all called the loans and my core bank stuck with me.. So I would never ever not give them the opp on a project even if I was paying more for the money that a competitor was trying to woo me with.. But right now I get 1 point and 5.5% my partner in my plane he gets the 5% with no points.. But his company made 15 mil last year.. I am not in that league so I have to be happy paying the point.:)
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
12y
@Corey Davis

your right we started with tax returns 2 years, fico 680 no real estate related bad debt and proof of reserves back in 2005.. The idea that hard money lenders will just make loans without vetting the borrower is just not the case here on the West coast.. maybe in other markets. But it your doing LTV loans with little skin in the game.. then your not going to be in bizz long if the borrowers are not vetted properly.

So your correct when newbies think they can get 100% financing,, they may in some markets but not with a lender on the west coast that has any amount of sophistication they have to many experienced people to lend to without taking the risk on a newbie.

Newbies need friends and family to launch there empires.. At least again here on the west coast by and large.
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David Beckman
Idaho Falls, ID · Member since 2014 · 4 posts · 4 votes
12y
I find much truth in what you write, Corey. While I am relatively new to RE investing, I do have some experience--all profitable. My account of my experience with DHM is accurate. Good to hear they actually do make loans. They do not, as far I know, finance 100%. They claim to finance 65% of ARV. Their quote to me was reasonable, as far as the amount I sought to borrow. I was willing to accept the terms, expensive as they were, because I determined could still make a profit. I brought about 50% of the cost of the property and rehab to the table. What I didn't care for was that I was told conflicting accounts of how my deal would come together more than once. And there was no attempt on their part to clarify the conflict between what I was told and what their legal agreements they wanted me to sign actually said.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
12y
@Corey Davis

just send me a PM I will be glad to explain our non recourse product. but really its pretty simple. you find a deal you get it TK and tenanted we loan 50% of what you have in it for 5 years.. gives you time to hopefully ride the market up refi or sell for massive profits :))
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
12y
@David Beckman

if you had 50% of cash for the project.. you should be able to find any number of reputable HML to finance your deal.. 50% skin in the game mitigages tax returns fico etc.. Its when as HML we are funding 80 to 90% of costs that one needs to underwrite the borrower not just rely on the collatoral
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David Beckman
Idaho Falls, ID · Member since 2014 · 4 posts · 4 votes
12y
Jay--I did in fact find other financing, with much better terms.

Corey--The $1,500, as I understood it, covers DHM's time and efforts to shepard you through your first deal. I was told that hat money is then refunded to you at closing when you sell the property.
0 Reply
Vance Petersen
Lender · Las Vegas, NV · Member since 2013 · 15 posts · 16 votes
12y
Guidelines are not uniform with regards to private/hard money lender's underwriting criteria. The niche for private/hard money is it's creative and unconventional approach within a local market. It is unusual for us or our affiliates to run credit checks on borrowers in determining whether a loan is viable. Our lending decisions are still based on the equity position, experience, & liquidity or exit strategy presented to us by the borrower. The project's current LTV is still #1 in determining the sufficient level of reassurance against default risk.

To generalize such that the days of property based lending are over is wide of the mark. Maybe in some investor's experience with nationwide lenders or within their region the vetting process has become more conventional.

John would still be best advised to shop around his local area and meet with several private/hard money lenders & run a couple scenarios by them to see if they are more favorable to work with then dohardmoney.
1 Reply
Brian Bower
Portland, OR · Member since 2013 · 15 posts · 2 votes
12y
Fascinating thread here guys, thanks! I have always assumed hard money lenders have pretty steep interest rates. Is that the case? I would gather that if so hard money lenders are for flip properties and not really for the buy and hold investor. Is this the case? Excuse the naivete.
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