All Forum Posts by: Ronald Isgate

Pennsylvania Real Estate /Hard Money Lender Attorney Here

I represent quite a few hard money lenders.  You need to check to see if your state requires a license - most states do not.  You need to hook up with an attorney who regularly represents hard money lenders - you need to make sure your loan docs are compliant with state laws and are binding on the borrower.  There is more to a loan package than a mortgage and note (such as personal guarantees, assignments of rents, enviro indemnifications, etc. etc.).  You should sit down with an attorney to go over these items to get a foundation for moving forward. 

Pennsylvania Real Estate Attorney Here. You absolutely need a CPA - they are one of the most important members of your team hands down.  I would recommend buying new properties in single purpose LLCs - if you transfer them now you would trigger a transfer tax event unless you put them into a land trust.  My recommendation is that you also speak with a real estate attorney that regularly represents investors - you need a game plan going forward on how to structure your current and future investments.  

Pennsylvania Real Estate and Hard Money Lender Attorney Here. Make sure to check your loan documents. There are provisions that can shortcut some (or all) of the foreclosure process. You may have a confession of judgment provision - which allows the lender to get a judgment without a trial (but they still have to take it to Sheriff Sale). If the borrower signed a deed in lieu of foreclosure at the time of obtaining the loan, that would allow the lender to simply take the property back by filing the deed. If the borrower was a LLC, they could have pledged shares of the LLC as collateral - which the lender could simply "take" and therefore own the LLC (and own the property). So there are always possibilities around the standard foreclosure process. Review your docs to see exactly what the Lender's execution options are.

Quote from @Chad Herring:

@Ronald Isgate thank you for the advice! One follow-up question: do you have any quick tips for finding a real estate attorney, such as the usury rate mentioned by @Beth Johnson? 

As this opportunity just came up, it sounds like I need to do much more legwork and research of the area prior to jumping in. Any good resources to help find private loan ranges for that particular area? 

Hey Chad.   Where is this deal located (sorry if I missed that but couldn’t find that in the post string).   Usury (and a whole host of other legal compliance issues) need to be answered and addressed by an attny who does this on a regular basis.   Networking is the best way to find a local attny who handles these transactions.   Let me know where this is located - if I happen to know of someone I would be happy to pass along a name or two 

I am a PA Real Estate Attorney.  It really boils down to your confidence in the borrower.  Remember - you are now the bank.  You must evaluate the borrower to determine the likelihood that the loan will be repaid.  

As far as the LLC - I would strongly suggest you speak with an attorney that does private lending work regularly to ensure that the loan docs will be valid and enforceable. I would recommend you get a personal guarantee for the principal(s) of the LLC - that will be key in locking them into the loan.

Hi Chad,

Real Estate Attorney here. I represent private money lenders and do several loan transactions a week. If this will be an ongoing business, I suggest you set up an LLC. I would highly recommend that you speak with an attorney that does this on a regular basis to ensure you are protected and to ensure the loan docs are legally binding - the loan docs are of course key to ensure that you have documents you can execute on in the event of a default (mortgage, note, assignment of rents, personal guarantee, etc.).

The lender dictates the terms. You need to determine what rate of return you would like to make it worth it for you (while of course keeping in mind what the market rates are in your area for interest rate and points - in the Phila area you can generally expect private loans to be in the 11-14% range and 2-4 points - but there are a lot of factors that go into the rate such as LTV, strength and experience of the borrower, 1st position vs. 2nd position, and so on).

Hi Jonathan,  I am a Real Estate Attorney in Doylestown, PA. Most of my clients are real estate investors. Happy to chat about how to best grow your portfolio.

As stated by several above - you are going to need a specific property for them to look at. HML base most of their decision upon the property/project --- i.e. asset based lending. I represent several lenders, and while many will take into account the borrower's credit and RE investor history, the major criteria they base their decision on will be the property - whether that be LTV, income generated, debt service, etc. I would recommend chatting with several lenders to get an idea of what they look for in deals they fund - that could help you in finding out what possible deals to pursue going forward and help your odds of getting approved. Best of luck!

Hey @Luis Roman - I am as well, and i represent alot of investors.  Feel free to reach out if you ever need anything 

I would recommend you call around to several lenders to get a feel for their process.  I represent quiet a few, and they all tend to work differently.  Many wont pre-qualify you because as mentioned above, it is asset based - but your personal strength as a borrower will impact your exit strategy (if you are going to refi or something like that to get out of the loan).  The strength of the deal is what will ultimately carry the day.  Now you may get from the lender how much they require down, etc., which is very useful information in trying to make your offer/evaluate the property.  Other lenders tend to skew towards the strength of the borrower - again, it all depends on the lender.  In my experience, your RE experience plays a part more so when you are talking about fix and flip loans.  MY suggestion is you start calling around to lenders to get as much info as you can - that will help you tremendously.