All Forum Posts by: David D.

Do you as a hard money lender pull your borrower’s credit?

I’ve done a few hard money loans but haven’t bothered to pull credit. My borrowers are good repeat customers now so it’s a non issue but I’m wondering what to do in the future. I tried a while back to get set up to pull credit but it seemed there were too many forms to fill out, needed a real street address for my office, they wanted to check my office for locks, no cell phone allowed, etc. I’m wondering if there is an easier way. Any suggestions?

I want to improve my ability to estimate repair costs. Every rehab I've done ended up with surprises. I'm thinking if I take a home inspector course I'd get the skills. Or, maybe take the general contracts course. I don't to become either...just want the knowledge. Anybody have suggestions?

Does filing a tax return in both states mean I pay AZ state tax AND CA state tax?

Notes: 1) if I buy a $100k note and DOT against an AZ property, I live in CA, and subsequently sell the note at a profit, do I pay AZ and/or CA state income tax? 2) If I buy a note and DOT against an AZ property, again I live in CA, and collect monthly payments, do I pay AZ and CA state income tax?

Thanks for taking the time to reply?

If I live in CA and earn income from AZ (re sale or rent income, note sale or interest income) do I pay CA or AZ state taxes? Does it make a difference if assets are owned in an entity?

Yes, you need a license in CA to broker hard money. Either a Real Estate Broker’s license issued by the California Department of Real Estate, or a California Finance Lenders license issued by the California Department of Corporations. Also, the new SAFE act requires an endorsement on the Broker’s license depending on the type of loans you do.

Speaking of doing a JV with a rehabber, I had an idea that I don’t know much about, maybe you or somebody else can help. Instead of going on title and executing a JV agreement with the rehabber, I was thinking it would be cool if I could simply create a note and deed of trust where the note, instead of interest, would call out a JV agreement. That way I could avoid the risks associate with being on title yet still get a cut of the profits. Have you ever done anything like this? Where could I get a note like this?

I’m in Los Angeles CA.

I broker hard money loans: 12.5%, 3pts, 1 yr, 65% ARV. I’m thinking of also limiting loan amount to 80% purchase price…the reason for the post. I heard a HML speak the other day that required 65% ARV AND 80% purchase price…that seemed a little too restrictive to me…seems to me if you don’t exceed 65% of true ARV you should be okay, but I wanted to see what others were doing.

I just started HML lending about 6 months ago, thus the wannabe remark in my original post. I have done some flips in the past so I feel comfortable working with rehabbers, doing my own bpo’s etc.

I have bought notes in the past, and will in the future, they are too much work to FIND for lazy me, and I always felt uneasy about the origination process of the private notes I bought, I thought maybe the disclosures weren’t complete or whatever…I like having control over the origination process.

As a hard money lender wannabe I'm trying to figure out what formula to use in determining loan amount.

I'm thinking: the lessor of 65% ARV or 80% of purchase price. Is this too restrictive? Should it be 65% ARV only?

I would ask how an owner can legally market a property that he has given an option on, if I'm understanding your interest in the property correctly.

Thanks for the quick and complete answer!

So I can be perfectly clear, the points and fees must go into the Ira, I guess, so I dont personally benefit, correct?

I presume my brother, a broker, could collect points and fees since siblings are not disqualified persons.

This is sounding really cool! Hard money interest, points, and fees into my Ira can really add up.

Now if I could only figure a way to convert my Ira to a Roth without paying an arm and leg in taxes.

Can I lend my Ira money and collect points and fees without violating IRS rules?
Can the points and fees go into the Ira?
If I can't do it personally, can my brother?