All Forum Posts by: Jeff S.

I know it’s hyperbole, but perhaps lines like “Banks could take weeks” and “Hard money lenders can mean forms and waiting” exist because they actually care whether you're qualified—before they indicate they’ll lend you money or let you mislead sellers into thinking you're legitimate, under their name.

If someone is truly qualified with the lenders behind your Chrome extension, why wouldn't they just pick up the phone, request a POF letter and a real bank statement, and skip the $250 junk fee? If your extension hands out POF letters to just anyone—qualified or not—then let's call it what it is: a scam.

Websites offering these kinds of “proof” letters are a dime a dozen online, usually with no verifiable bank statement and zero credibility. It’s the kind of thing no serious professional should be associated with.

I disagree with @Jay Hinrichs. The chance that they are scammers is not 97%, it’s 100%. (Just kidding, Jay. 🤣)

Real lenders get their fees when they perform, at closing. Though this firm says their up-front fee is refundable, what do you think the chances are that they will actually honor this promise? I’ll say 0%.

Real lenders use professionals, including legitimate title and escrow or closing attorneys, as well as vetted documentation. This is in your interest as well.

Real lenders secure their loans with a lien against the property so that they are assured they will be paid back if for some reason, you can’t perform.

You found nothing more than a pretender lender, @Robert McClung III. If you ask for references, who do you think you’ll be speaking to?

The last thing you want, @Shane Bishop, is to make an aggressive offer on a property—perhaps a 10-day non-contingent close—and then scramble to find the money, all while worrying about your EMD.

Similarly, spending a lot of time preparing various financial statements, business plans, applications, and lists of every property ever owned could turn into a waste of time. After you’ve spoken to a handful of private/hard money lenders, you’ll find that, unlike conventional lenders with standardized minimum requirements, they will be as varied as fingerprints. Don’t invest time in this yet.

Call a handful of P/HML's and ask them about their loan criteria. Will they lend on STRs and under what terms? What are their physical and financial expectations of the property? What do they expect of you in terms of your background and experience? What documents do they want to see from you? Appraisals? Credit? POF requirements? How long do they typically take to fund? This list goes on, but you'll see that everyone's process will be different.

Lastly, since this is a business based on relationships, getting to know your lender will go a long way toward the potential accommodations you might need to obtain a loan. We meet and get to know every borrower. You might consider inviting potential lenders to lunch.

There seems to be some confusion here. Transferring ownership of a loan is not the same as transferring ownership of the property that secures the loan.

Transferring ownership of a loan (e.g., changing the beneficiary) is done using an allonge to transfer the note and a recorded assignment to transfer the mortgage or deed of trust. You will work with the title and hazard insurance providers, and notify the borrower that their payment info has changed.  See @Patrick Roberts response.

Transferring ownership of a property is state-specific but can often be done with a quitclaim deed. This has nothing to do with the OP’s question.

Who am I to say what will or won’t work, @Kelly Beck? What I can tell you is that we meet and have lunch a few times with each potential borrower to get to know them, and for them to get to know us. It can’t get any more casual, and anyone treating it like “storytime” is likely in for a very short meeting.

The whole point is to genuinely get to know one another and our respective backgrounds. If someone prefers to play games or lean on gimmicks, they’re probably not a good fit.

Why not just be yourself?

History is only repeating itself. In my view, it closely mirrors the conditions that led to the 2008 crash. Lending has become so competitive that many lenders, desperate to close loans, have lowered their standards to the point where almost anyone with the flimsiest qualifications can secure financing for the weakest of deals. They bundle their loans, sell to Wall Street, and work with brokers or affiliates. No one has anything to lose.

The pattern of passing the buck—from brokers to lenders to Wall Street—without any sense of responsibility or accountability has become the norm. BP is a good example. These days, it seems that every other post includes three or four "lenders" urging the OP to “hop on a call” so they can solve their problem (i.e., make a commission). Heaven knows how many fall for the DMs we never see.

I wonder: of the $200M in defaults, how many were originated by a faker lender or joker broker with no skin in the game, versus direct lenders who use their own funds, hold their loans, and only make money when the deal is successful?

We’re just slightly smaller than Kiavi 🤪, but we’ve been lending our own money since 2010. We’re not desperate. We evaluate every property, build real relationships with our borrowers, and as a result, have had only two foreclosures since we started—with zero intention of compromising our criteria.

It’s both interesting and, frankly, shameful that Kiavi mined Florida for all it was worth, then bailed. Good riddance to them. Rest assured: lenders who make sound decisions, work with experienced borrowers, and fund practical deals will step in to fill the gap.  Most likely some of the big guys will disappear or they will change their lending criteria.

“I’ll agree to your price if you agree to my terms,” is the golden rule of deals like this, @Raquel Baranow. Don’t get backed into a corner.

I agree with @Patrick Roberts. If you are going to sell at a price substantially below the market, even considering the smoke damage, ensure the terms are in your favor. Selling at 3% interest amortized will leave you with nowhere to go if you want to sell your loan.

“Amortized over 10 years If balloon payment, principal balance due on or before 06/01/2035,” is not even English. No wonder you’re confused. So am I and I can’t believe the Arizona Association of Realtors would use this form.

If your buyer wants lower payments, consider making this an interest-only loan with a decent down payment and maybe a shorter term to maturity. This would keep the principal balance unchanged over the term of the loan. For example, an $850 monthly payment interest only is a 6.2% return on a $165k loan. With a $20k down payment ($145k loan), a 10% or 12% return would require a $1208 or $1450 per month payment, respectively. Was your rent below the market? Run some numbers and don’t let your buyer set the terms.

Most importantly, I see where this is going: You’re going to use loan docs provided by your borrower. Right? Do you think they will be in your interest? These should be written with zero ambiguity by your lawyer. I know you really, really want to get out. Do you know how hard it is to find good deals now? You have something others really, really want. I know it’s easy for me to say, but don’t roll over on this, Raquel.

Please don’t take this wrong, @Marc Foster.  We’ve fallen into the trap of making loans to contractors with decades of construction experience but no flipping experience. Never again. I know you’re thinking otherwise, but because you can no doubt build or remodel a home cost-effectively, and I bet with your eyes closed, it doesn’t mean you also have the vision to flip a house. Protect yourself. Humility is the name of the game.

Many of the long-time, battle-hardened rehabbers we’ve been doing business with for years are wise enough to bring designers in before they even draw up plans or start construction. They realize that the designs they’ve been using for years are now obsolete and out of date.

Similarly, valuing a flip is always an art. It includes a construction cost component that you probably understand, and much else that you might not be used to, including ARV determination.

Our background with experienced contractors is that they are great at construction but not design and most think that because of their experience, they understand everything. They don’t. End buyers don’t care what went into the project – your forte. Design and price are near the top of what sells homes.

No offense, but anymore, we would consider you a newbie. Nonetheless, I have no doubt that you’ll find money. Just don’t think that because of your related, but not direct, experience your project is a slam dunk. Please understand that I’m not trying to be cynical, but helpful, based on our real-world experiences.

Profit splitting is not normally in your interest, @Anupam Banerji. You should run the numbers before you agree to anything like this. You’re not clear on what you’re doing, but assuming typical hard money rates of 11% interest only plus 2 points on a six-month flip, the lender will end up taking between 25% and 33% of the profit. With experience, these loan terms should be obtainable. Why would you give a lender more?

Unless your circumstances are extenuating, 50/50 profit splits or sharing —which you occasionally see house flippers offer here—make no sense. It makes even less sense to both borrow money and share profits. Who are you working for?

I don’t know what “… skin in the game but not the entire down payment,” means. If you're considering this because you don’t have enough for a down payment, you may be undercapitalized and might consider waiting until you're better funded.

Are you an underworld figure, @Sylvia Castellanos? In witness protection? Perhaps a CIA operative? These seem to be some extraordinary and expensive steps you’re going through to obtain something virtually no one needs. Honestly, I had to smile over the irony.

I’m not trying to be snarky but you’re jumping through hoops to secure anonymity, only to end up frustrated by the very companies that promise it—companies that, ironically, are shrouded in their own layers of privacy. If you're already this annoyed trying to work with them, imagine how anyone else will feel trying to do business with you.

Here's the simple truth: despite the glossy promises made by the law firms pushing this stuff, real, airtight privacy just doesn't exist. Try sending one of your attorneys into court to tell a judge, "Sorry, we're not disclosing who owns the LLC." How do you think that will work out?

Also worth noting—unless all your properties are located in Wyoming, your LLCs will have to register as foreign entities in every other state where the properties actually sit. That usually means disclosing ownership anyway—and paying for the extra fees and tax reporting.

I know many investors who are perfectly comfortable buying property in their own name. Most, however, form LLCs in the states where the properties are located, run their businesses with integrity (not implying you don’t), and carry adequate insurance.

Bottom line: in this day and age, there’s virtually no privacy that can’t be pierced. And anyone telling you the opposite is probably selling you something else, too. Don’t waste your time or money on this.