All Forum Posts by: Ben Stoodley

Hi Jayzon Miller welcome to BP! You'll definitely find a lot of helpful tips on this site when it comes to getting into the real estate investing industry. Without much money of your own, you'll definitely need a capital partner to do a joint venture project wth to start building your own capital. After a few of these JV deals, you should have enough experience and capital to do your own deals. Use hard money to leverage your flips (I'm assuming you want to flip) and do as many as possible. Remember to get them under contract first so you don't lose them, then do your due diligence while under the contingency period. That's when you line up financing and contractors. Wholesaling is a last resort option. If for some reason you can't raise the money and close he deal, try wholesaling. Best of luck to you!

Hard money lenders and private lenders are essentially the same idea. To me, private lenders are your actual individual investors, that will lend you money for your project for a certain return or equity split. Hard money lenders are usually groups or companies that have much larger funds to lend. Regardless, both are great options and should be used for your real estate investing, especially flipping. The shorter term deals like flipping are most benefited from hard money loans. 

HML are asset based and can close very quickly (less than 10 days), lending somewhere around 65-70% of the ARV (After Repaired Value). The small amount of "skin in the game" required by the borrower can usually be made from multiple sources (2nd position gap lenders/private lenders, seller carry back, cross collateral, personal capital, etc). Interest rates range from 9-12% in CA and come with 2-4 origination points. Although the rates are high, the speed and ease of HML allow you to acquire properties rapidly, build capital rapidly, and build your business bigger and faster. HML shouldn't charge any prepayment penalty and you should definitely call around to get an idea of all other fees associated with the loan. Typically, HML will charge around $1500-$3000 in fees, most all are unnecessary.

Being asset based, you should try to have a deal in hand before actually selecting your lender. HMLs will need to underwrite an actual deal to give a quote. So the stronger of a deal you bring them, the better a quote they can provide you with. There is plenty of money out there, finding the good deals is the hard part. Hope this helps, feel free to contact me with any specific questions.

All the Best,

Hi @Eric Griemsmann - always good to call around a few different lenders and ask. However, they will likely be very general with their answers until you have an actual project to look at. Most lenders are mainly asset based. So the stronger of a deal that you bring them, the better the loan quote they can provide. Deferring payments until the end would only be an option on strong deals, for most lenders. Regardless, you will need to have some "skin in the game" with all lenders. At least some % of the purchase price must be coming from the borrower, usually at least 10-20% of the purchase. Even if deferred payments are an option, make sure to have extra funds to cover any unexpected costs or delays in the project that result in more/longer holding costs (deferred payment may not covered, as mentioned earlier). Some lenders allow for 2nd position "gap lenders" to come in behind their loan and fund your down payment (the 10-20%, or more) and some of these gap lenders also offer to pay holding costs. However, these gap lenders are usually quite a bit more expensive and/or ask for equity splits. 

Many options, as you can see. There's plenty of money out there ready to be lent, so I suggest focusing on acquiring the best deals possible and you will have no problem lining up the money.

Best of Luck

Welcome @Jennifer Kennedy !

Always like to see new investors build their confidence through BP and take the plunge into their investing career shortly after. We have quite a few deals in Austin right now and they are all very strong flips. Austin and Dallas both have provided us with many great deals lately (loans, I'm a lender). The price points, market time, and margins for ROI all seem to be much better than many other locations. Best of luck to you and if you have any questions, I would be happy to help!

Hi @Ross Bernard it is not uncommon for HML to require borrowing entities, rather than holding Title and the Loan in a personal name. However, it should be just as easy to find HMLs that do not require that, and will lend to you in your personal name. This doesn't mean it's a personal guarantee, the vast majority of all HML are asset based and non recourse. Best of luck!

Hi @Kurt Kline - you're smart to start so early, and are in the right places to learn. There has been a lot of talk about 401k and other savings instruments, all very good options. IN MY OPINION, it all comes down to your personal financial situation and risk VS return strategy. If you want to yield double digit returns, investing in real estate is your safest bet. The younger you are, the more risk you can afford to take, technically. I personally do not like crowdfunding sources because the people themselves play a large factor in the project. I only like to work with people that I know are capable of doing very good work and experienced, hence, I only work with people I know in person and can trust. I then give them however much money to invest in their real estate deals. Essentially the same idea as crowdfunding but really just Joint Venture investing. This is a great way to gain experience and make your money work for you at the same time. Experience is key in my opinion. I think Real Estate is by far the BEST investment vehicle available, safest and biggest returns due to leveraging and other tools. So if you can invest in real estate projects with others that you trust, why not just do that? Yes, it is more risky than 401k's, savings, cds, etc, but there is no reward without risk, and this is the business you are entering. Just my 2 cents. Hope it helps.

Hi @Thomas Richter,

I am a lender in San Diego, I normally have heard of every decent-to-great lender out there, especially ones that offer such attractive rates. There are a few companies that may be able to get as low as 8.99% out there, but that is usually reserved for their seasoned borrowers, that do high volume. CA is probably the most competitive market for hard money lending, we have been forced to bring our rates down as well. However, 7.75% is unrealistic. 9-12% is a common range for CA lenders. Further, their website seems very spamy. I would do a reverse Title search on them, find out how many loans they actually have out there. Good way to check their credibility. You never know, I've seen weirder things happen, but unfortunately this HML industry is also home to some unethical practices, so always be sure to do your research! Hope this helps.

Best,

• 9.99% ~ 12% Interest
• Up to 65% ARV (Up to 85% LTC + 100% Rehab Costs)
• 2-4 Points
• 6-24 Month Term
• Funding Within 5 Days
• No Appraisal Required
• $50K-$5MM Loan Amounts
• Same Day Approval
• No Prepayment Penalty
• No Upfront/Junk Fees
• Non-Consumer Loans Only (NOO)
• 1st Position Loans Only

Ben Stoodley Direct Private Money Lender

Phone: (619) 777-8790

Email:

Apply Online:

CA DRE #01522724 NMLS #296471

Hi @Charles Cooper,

Welcome to BP! There are a lot of threads on here talking about hard money and how to find a good lender. Being located in CA, you will have access to a vast amount of lenders. Finding a reputable and trustworthy one can be tough. I suggest viewing bigger, well known companies online and checking out all their rates and fees. This should be pretty generic, 9-12% interest and 2-4 points. Then you should call each one and feel them out on the phone, ask about ALL their fees, everything that will show up on the HUD, as many lenders have additional fees ranging from $500-$5000 per loan, most all of which is unnecessary. Biggest piece of advice, make sure the HML you choose is a DIRECT LENDER, this makes a big difference in the investment world. Direct Lenders should be able to close in under a week and will be asset based. Ask if they are the actual check writer and if the money is all 100% managed in house. And most importantly, ask around, ask fellow investors who they use and who they'd recommend. Try a few lenders that seem to have good track records. The hard money industry had a bad rep, but I guarantee you they aren't all sharks. Used the right way, your HML could be the biggest part of your success in this business.

Best of Luck,

Ben

Hi @Christopher Johnson and welcome!

Hard money is mainly used for short term investments, due to high interest rates. Mostly fix and flips, refinances, ground up construction, buy n hold acquisitions, etc. It allows the investors to acquire the property quickly, which in most markets is the hardest part. It also allows them to finance all of the rehab, since most HML are ARV based. Many investors also use hard money due to not being able to acquire conventional loans for investment properties. Even if they can get conventional, and the property allows conventional, then the time to close is way too long for most of these transactions. Overall, investors use hard money for speed and being asset based.

As a lender, it is very safe due to being in 1st position TD and capping out around 65-70% LTV or ARV. High interest rates secured by real estate make a great, safe high ROI. They get their money back fast and can continuously lend it out for good deals.

Hope this helps. Feel free to contact for more info. Good luck!