I emailed b2r a while back, found out their minimum is way above my current goals ( down money) and asked if they did smaller loans or had someone that did smaller amounts. A while later I got an email from someone using the name of micky James with the email being mickyfinancial @ *******. com. Asked what terms of financing are. The response was fill out the loan app, if I am serious, and see if they will to do this. Apparently they do loans for non REI as well. At 3% I want to know what fees are involved. I realize I'm so new to this that I'm green like a fresh twig, but even I KNOW that sounds way to good to be true. NO ONE I have ever heard of in all the REI materials I have read, listened to and watched, does loans at 3%. If it is 3% I figure there has to be origination fees, points etc. My concern is that this may be a fraud to get personal info for id theft but yet it might be legit and they just don't want to answer a lot of questions knowing that some of us are shopping. My thought is if they are legit maybe see about getting pre-approved for how ever much I can and go from there. The fact they did not give me straight answers has a BIG RED FLAG going off inside my head, yet like I said maybe it is just they see any thing that is not a loan app as a waste of time. Any help on this would be good. Thanks
Disclosure: I am a senior executive.
A couple of things:
- B2R Finance is in no way affiliated with Micky Financial.
- I'd like to understand the downpayment issue you are referencing.
- We are launching loans down to $75,000 in March.
Hi Tim, Thanks for clarifying the relationship with MF up.
As far as the down issue. I just wholesaled out my home. After all the boring details, I have less then 1K for a down on any thing. I figure any lender is going to want to see experience or barring that at least my own skin in the game in proportion to the loan. I figure 1K is not going to get it done, hence the comment about down.
I don't know if this is the right place to ask this but since your in the business, what exactly do hard money lenders look at when some one is just starting out?
I'm looking at being owner occupied and if it is a SFR, rent out rooms to make payments, generate more cash flow etc. Would not mind going hard money as long as I know I can make the payments on time in a O/O rent and hold situation.
@ba r., liquidity is so important. Hard money lender are not like a regular lender looking at your W2 income as most of our real estate investors don't have a "real" job. This is critical on fix and flip projects in particular. It's capital intensive and we want to see investors have the bandwidth to get through it successfully and deal with those uh-oh moments that are bound to happen.
I've heard of loan-to-own hard money lenders that will purposefully let investors get in over their head because they want the deal. I don't recall hearing that occurring in our circles. Anyone?
As far as the rental side, cash is a little less important especially if there's equity in the property and there's a good track record of rents. We do check credit. Doesn't mean it has to be perfect. But if you've got a history of just not paying bills in general, that's not a good sign for us. We understand a foreclosure, short sale and BKs. Life happens.
I like what my Dad says about private money. It's called "hard money" because it took someone a lot of time and effort to save up that much. It shouldn't be handled casually. If it was your money you were lending, I think you'd probably be looking at a similar combination of factors.
The industry is awash in money right now, @BA R. There's no reason you should be responding to anonymous solicitations when you can attend a few local real estate clubs and probably meet as many lenders as you need, eye-to-eye and learn their lending criteria. Plus, why would anyone loan money at what now are near T-bill rates?
"I've heard of loan-to-own hard money lenders that will purposefully let investors get in over their head because they want the deal. I don't recall hearing that occurring in our circles. Anyone?"
I really think this is an alliterative urban legend, @Aaron Norris . On it's face it makes no sense. Any lender using sensible underwriting criteria should be owed much less than the property is worth in a foreclosure. This almost assures the home will sell to someone else at the trustee auction. On the other hand, over-lending would mean the lender is owed more than the property is worth and they could end up owning it at auction, but this would be at a loss. Either way, this makes no sense, unless you somehow knew in advance that you could coerce a borrower into a deed-in-lieu. How often does this happen? I've heard the term too, and don't buy it.
I know there are legitimate strategies to own a house when purchasing non-performing notes. However, this has nothing to do with the ethics of the original lender -- who probably took a beating on the loan.
Jeff S Nasometimes loans don't make it to trustee sale (deed in lieu). I've only heard of very small private lenders putting an investor in a deal they couldn't handle, hoping they would not perform in hopes they'd get the property for their personal rental portfolio.
You are correct, any seasoned lender would not fund something like this. The strategy for hard money lenders in the business would be to do multiple deals, not one-and-done. That would be a little silly.
I was just pointing out what we look for as a hard money lender and to be cautious if he's presented something else.
Jeff S Na no money does not = a HML.. only in the puff advertising pieces when you get to reality you will realize you need cash and experience to land a HML from an experienced HML or one that wants to stay in business
I've heard the same thing about the hedge funds getting into the hard money lending space. Many of them have drastically changed their programs since they got in about three years ago. They answer to Wall Street and are creating programs that have to work nationwide. That's no easy task as real estate is certainly micro. We're still hoping the government comes around and allows us more access to financing. We've tried! But, investors/speculators are still the bad guys from the bust. They don't see the difference and politically, we're not sexy.
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