All Forum Posts by: Matt Schaugaard

Hi @Jay Hinrichs,

I’m happy to address your skepticism and concerns.

Clearly you’re a seasoned expert and I’m not saying that facetiously.There’s no doubt in my mind that you’ve been very successful in the Real Estate Industry.We’ve been successfully helping real estate investors for over 10 years successfully fix and flip properties.

The upfront deposit that we require gives our customers more than just access to our funding.We primarily work with new investors and because of that there are inherent challenges.Challenges that we are set up to help our customers overcome.Just to name a few:

• 1.Accurately Evaluating a Rehab property to establish the real After Repair Value
• 2.Accurately identifying the real net profit
• 3.Accurately establishing and structuring the rehab project / budget
• 4.Effectively relisting the property for maximum resale
• 5.For those with good credit we work to establish business lines of credit

We provide our customers access to several tools and resources well beyond what your average Hard Money Lender provides.

I agree there are great lenders all over the US that don’t require a deposit.Instead they require 10 – 20% down, good credit, and experience investing in real estate.

I'm happy to send over some HUD statements that show 100% Financing deals that we are doing.Though I don't expect that'll do much. You referring to them as "Unicorns" and casting doubt on the reality that it happens, just because you haven't had a deal financed at 100% doesn't mean it doesn't happen. Admittedly we offer something that no other Hard Money Lender offers and I can see why that might cause you heart burn.

100% Financing occurs when the purchase, rehab and closing costs are less than 70% of the ARV.If the total cost is more than 70% the customer has a couple of different options.

• 1.They bring the difference to the table as cash to close.
• 2.We help them wholesale the property to someone with the cash to close
• 3.Leverage Business Lines of Credit to cover the gap

If someone only has $2,000 to their name we’re not working with them.There are certainly incidental expenses outside of what’s included in 100% Financing and that’s a discussion we have with every customer.We’re not looking to do business with someone whose on their last dime.

I’d love to take some time to discuss in detail exactly what we do, including the resources that we provide.Our commitment to our customer is that we’re willing to work with them to fund their first deal as long as they’re willing to work with us.A portion of the deposit does go towards sending out 2-3 Evaluators out to the property to establish the After Repair Value.

@Antonio Cooper, congratulations on your first deal.  I'm looking forward to seeing how it turns out!

@Stephen Nicholson, just like every other Hard Money Lender, one of the biggest challenges is helping new investors get dialed in on establishing accurate After Repair Values. It can be disheartening when the values don’t come back as high as hoped. This frequently is a case of overly optimistic investors looking at a deal from a best case scenario. When there are disagreements with the potential borrower we do provide a dispute process allowing the customer to have us take a second look at the evaluations. 

I'm sure one of our Account Advisors encouraged Antonio to share his experience on BiggerPockets.  You can cast doubt all you want.  The reality is Antonio just closed a loan with us and gave an honest and candid response.   

@Darrin Carey, our Interest Rate is 15-18% as an Annualized Rate. Our standard loan is a 5-month term which puts the effective rate at 6.25% - 7.5%. So a loan of $100K would have an interest rate of $6,250 to $7,500.  I noticed you're Hard Money Lender, Since you're a Hard Money Lender I'm not sure why you'd do business with us either.  In fact I'm not sure why you would've called in at all.  We claim to provide 100% Financing because we do provide 100% Financing.  

Corey,

The rules/regs/laws will vary depending on what State(s) you're looking to lend in.  Your best bet is to get legal counsel to make sure you protect yourself.

Good Luck!

@Eric Tinsley @Jay Hinrichs

Let me clarify the context of "up to the borrower to be honest and realistic"  When a customer calls in with a property under contract we run the deal through our Advanced Deal Analysis Software which gives a comprehensive breakdown of the projected costs and profit among other things.  The output is based on the numbers the borrower is providing us.  If the numbers look good we recommend sending out 2-3 Independent local experts to evaluate the property including pulling 3 Active and 3 Sold comps and an overall market analysis in addition to a breakdown on the scope of work.  

We're telling the customer that they need to be sure they're being realistic with themselves on the opportunity before they pay for the cost of sending evaluators out to the property.  There's a tendency particularly with new investors to want to look at the opportunity from a best case scenario which immediately puts them in a high risk position.  We're trying to make sure the borrowers have done accurate leg work upfront before they commit resources to a deal.  I'm not sure what Jay's implying in regards to this not being "usual lender speak".  It's absolutely what I would want a lender to do for me.  Make sure I'm being honest with myself on the numbers so that I'm not losing money.    

To Jay's point, we're keeping people from buying a dud.  Sometimes that can be hard to swallow when a customers got their hopes up on a deal and then our 2-3 independent local evaluators put the After Repair Value at a lower amount than what the customer was expecting.

We recognize the value of local knowledge and that's exactly why we leverage the expertise of at least 2 independent individuals from the area to help us establish values.

Again, just like Jay we've saved many a new investor from getting into a bad deal.  

@Travis Sperr

I want to be clear here.  We do not broker loans.  We are a direct lender.  

Hi Matt, (great name by the way) I’m on the Executive Team at DoHardMoney and wanted to take a minute to address your experience and your assessment of DoHardMoney.

We’ve been in business for over 10 years successfully helping Real Estate Investors fix and flip properties, specifically with providing funding that a lot of our customers were unable to get anywhere else. I understand that stating our legitimacy will do very little to sway your perception.

Ultimately my intention of responding is to hopefully clarify any misunderstandings or assumptions that were made during the prequalification process that you went through.

We are a legitimate company that provides great resources most importantly funding for fix and flip properties. Hopefully a little perspective on the history of DoHardMoney and what our mission is might lend some clarity.

Ryan Wright the owner of DoHardMoney started the company after several years as a successful Real Estate Investor with a large portfolio of rental properties and several successful fix and flips. Providing funding was a natural next step in investing for him which led to the creation of DoHardMoney. In addition to this he recruited a handful of investors with available capital who saw the value in putting their money to work through real estate investing, specifically for funding fix and flip investment properties.

From the perspective of the investors whose funds we use to finance properties one of the primary drivers is to have as much of their capital out working for them as possible. That being said, we are aggressively working to identify serious investors that will put that money to work.

To your point there are charlatans out there that are taking advantage of individuals which certainly adds to the difficulty of what we’re trying to accomplish with serious investors that are looking for a solution that will allow them to get into real estate investing when they have bad credit and very little money. We understand that we might not be a fit for everyone but for the new investor who has bad credit, lacks experience and doesn’t have 10-20% down that will be the minimum required by almost every other Hard Money Lender out there we’re a great option.

Our 100% Financing Program really is the ideal solution for most customers that we work with. We work with individuals to help them structure their business including their financial resources in a way that gives them the greatest opportunity to get funding on a good deal and to get 100% financing on a great deal. For most people they should be getting all of their tools and resources in place before they get a property under contract. There are a series of common mistakes new investors tend to make and we are very good at helping our customers avoid those pitfalls. This results in motivated borrowers achieving their first profitable deal much earlier in their career than if they would have gone it alone.

We do have BiggerPockets customers that we have funded and they are found throughout the site. Just to name a few:

Casey Carroll – In another discussion you'll find Casey's comments related to the successful deals he's done with us. Here's what he had to say in reference to the Evaluation costs, "The cash up front is to have two independent evaluators (usually realtors) to go out and run a CMA based on an excepted ARV. This costs money to do. I've done deals with these guys before and they are conservative with their estimates because if you aren't, then you will surely lose money. I've done 4 rehabs, 2 with them, 2 with other lenders, and the two I did with them actually made money while the two I've done with other HML's lost money. If your deal passes their sniff test, you WILL be profitable... and they want to ensure that they're not putting you or them in a bad position."

Cassandra Johnson - https://www.biggerpockets.com/forums/311/topics/134810-dohardmoneycom-problem

Ben Otwell – "I'm writing this post in respect to dohardmoney I was just funded yesterday and have had demolition started today. In my experience with dohardmoney I was treated with respect and the customer service was excellent. Brittany and Jon were my loan servicers and kept me up to date on all aspects of the process. The deal I have is a great one and I was very confident in my research as far as ARV and construction costs. The evaluation process went well except for one rouge agent who used comps from a whole different area and was comparing my property to houses half the size. I was given a chance to dispute the agents findings show actual recent sold and closed comps and the evaluation was approved. I brought $844 to close and started construction. I would definitely repeat the process and will as soon as the next deal is brought to me.

Thanks you Brittany and Jon for all your hard work and promptness on this deal.”

Ben and Cassandra were funded a couple weeks ago. It’s true that we’re not actively on BiggerPockets identifying individuals that are a part of this community and receiving funding from us. We recognize we can do better about our level of activity on BiggerPockets. It would clearly help the entire community if we shared more details about the successes our customers are having as we fund their deals.

When a customer comes to us with a property already under contract we send the customer directly to our Evaluation Coordinator who reviews the deal with the customer and confirms there is strong profit potential. If the deal fits into the underwriting parameters that we've established and everything lines up then we order the property evaluation. An evaluation includes sending 2-3 independent evaluators to the property in order to establish an accurate After Repair Value (ARV). It's true that there are some customers who are on BiggerPockets that had the values come back lower than what they were expecting and as a result didn't receive funding. We work hard to help new investors do as much due diligence as possible prior to ordering the Evaluation. This includes inviting them to fill out a property value analysis worksheet that helps them understand what the most likely ARV is on the property. That way their confidence is much higher once they go ahead with the $650 and we start the evaluation process. This in large part is why we encourage customers to enroll in our system before they go out and get a property under contract. We want to help them protect their investment so they can only commit funds when their likelihood of a strong ROI is as high as possible.

If you go to our website under “education” you can view Case Studies of a handful of clients and their experience with us. While I understand that from your perspective it’s a lot more exciting to think that these are paid actors and fake testimonials, the reality is that they are real people and they are describing real experiences with DoHardMoney.

I would certainly acknowledge that we would benefit from encouraging more of our customers to jump onto BiggerPockets and share their experiences. Expect to see more of that.

I wish you all of the best Matt; I’d love to have a chance to talk to you in more detail including giving you a run down on some of the tools and resources that we make available to our clients. I think you’ll find that what we offer is legitimate and valuable.

We've got a fantastic pre-arranged financing deal available that is already under contract in downtown Charleston, South Carolina. This is an exclusive deal ONLY available through DoHardMoney.com.

This is a 2,000 square foot 4-bedroom 2.5-bath single family home with fantastic profit potential for the right buyer.This deal is hot off our evaluators desk... that's right... we've already done the evaluations and have pre-arranged approved financing! Here's a high level view of the deal:

• Purchase Price $199,500
• Estimated ARV $350,000+
• Estimated Repairs $50K - $80K
• Pre-Arranged Financing Available $195,000
• Estimated Cash-to-Close Needed $80,000
• Estimated Net Profit $25,000 - $50,000

If you have the cash-to-close available and are interested in making up to $50K in net profit on this deal... we can close in as little as 5 business days. Just give me a call ASAP at (404) 994-5067 or email us at [email protected] and I can give you access to the property and get started on closing the deal for you.

Again... this is a pre-arranged financing deal. We've already done multiple independent evaluations with local, licensed, & insured real estate experts to assess the value and scope of work for necessary repairs. This property has passed our minimum net profit thresholds and advanced risk analysis... we're ready to close on the deal but just need a buyer with the cash-to-close to make the deal happen.

Give me a call today at (404) 994-5067... or email us at [email protected]... this is in a VERY active area for us and we'll have a LOT of investors interested in this deal... it WILL go fast so don't procrastinate on this or the deal will be gone.

Hat Tip to @Jon Holdman. "Flip this House Math" is an apt description. Your systematic breakdown and analysis of the deal is spot on. For the new investor what you've done here is Real Estate Investing 101. You layout some fundamentals that every investor must be intimately familiar with.

I thoroughly enjoyed your assessment.

Matt

David, we absolutely warn buyers when a deal is not good. The challenge is that they often only hear what they want to hear. Particularly with new investors, they get emotionally attached to a property which shades their ability to reason clearly (an agent trying to force the deal doesn't help either). Also not all deals can easily be bucketed into good/bad, the reality is what may be a good deal for one investor is not a good deal for another investor.

We've been lending Hard Money for over 8 years. You don't stay in business by lending on bad deals. It's in our best interest to help investors find good deals. How does it benefit us to "trick" someone into trying to move forward on a bad deal?

@David Beard and @David C. I think there’s some confusion on how I communicated this deal. Let me try to provide some clarification.

David Beard, as you mentioned, Selling and Carrying Costs eat up a large portion of the potential profit on this deal. When I presented the deal above it wasn’t to show how great of deal it was, it was intended to show the facts regarding the deal and as both of you have rightly confirmed the deal is not a good deal. As we tried to explain to Daniel, the numbers were tight.

On a side note – We find that one of the biggest challenges that new investors come up against is that they have an agent they’re using to find their properties. Frequently the agent doesn’t understand all of the costs associated with a deal and as a result gets the investor into a deal that’s no good from the get go. I could go into detail on where they blow it, but I’ll save that for another discussion.

“And loan fees/interest of 16% of the loan… is absurdly expensive “. There are several factors that come into play in regards to the structure of our loan offer. I don’t make claims that we’re the best option for everyone out there, but we’re open to lending to investors with:

·Bad Credit

·Little to No Money Down (If the numbers line up)

·No Experience

With a lot of new investors we're the only option they have.

“We Tried to Bring in Gap” – I didn’t explain this accurately. Daniel was unable to cover all of the expenses outside of what we were willing to offer and so he wanted us to refer the deal to gap funders. We told him that the numbers were tight and it’d be a big stretch for anyone to pick it up. Knowing that the likelihood was that no one would pick it up we sent it out anyway, if for no other reason but to honestly say that we did everything in our power to make the deal work; while all along trying to explain to Daniel that the numbers were tight.

"Rehabber should make at least 150% of what the HML makes, preferably double" – When it's a solid deal this happens, but David C. makes a good point, "Seriously, if you were making good money you would walk away from a deal just because the lender was making more than you?"

@Daniel Kowal, I’m sorry there was a misunderstanding on the expectation of 100% Financing. We try to set the expectation that it’s possible but until we see what the true numbers are, based on the independent evaluators we can’t say confidently either way.

We do have a Free Deal Analyzer App that can at least help you calculate all the expenses you should factor in when determining whether or not the property you’re looking at has enough potential to pursue.http://www.dohardmoney.com/dealanalyzer . Maybe send it over to your broker; it’ll give them a better idea on the spread you need to make money on future deals. Good Luck!