How do I find "Hard Money Loans" for real?

Hi Michael,

Welcome to DG! Your best bet is to attend a local REI meeting and there will generally be HML's there passing out cards. HML is very local however. I live up in Santa Barbara and lenders here don't lend there in LA, and vice versa.

Even with a good deal and not lending off credit, be prepared to put your own cash into the deal. The HML will want to make sure you have money for the interest payments (generally 6 months worth), as well as cash reserves to finish the project in case problems come up.

Good luck and let us know.

- Tom

Tom,
Thanks for the info and the little bit of "harsh reality'...lol..as most, I had hoped for a true "no money/credit" deal if my hard work produced worthy numbers...disheartening but I will continue, I pretty much HAVE to make this work. Best Wishes!

No problem Michael. Yeah try one of the REI meetings in your area for your best opportunity to network. I went the Santa Barbara one for the first time two weeks ago and it was amazing! I believe you said you're based out of Thousand Oaks and I think there's a group in Woodland Hills.

Anyway, feel free to post questions and good luck with everything,

Tom

Michael,
Small world, I was also at a DG Live seminar this last week and I did not have the $2000 for the 3 day class either. So I am pounding though the "30 Days to Real Estate Cash". We are local to each other and should met to share success stories.

I ask for why hard money because are you planning on rehabbing these homes? Hard money lenders typically want 1 years interest. The funding group that Dean group mention at our seminar was a transactional lender, meaning a very short term loan. On this site I did a search for transactional funding and found this:
http://www.deangraziosi.com/real-estate-forums/buying-foreclosures-reos-...

I am churning though the listed companies now to see which ones are still in business since the forum article dates back to 2011.

See you at the beach!

Hey Jim,
I am in LA area, San Fernando Valley. Close enough that yes I do think we could share some resources and both benefit from double efforts. I love Motorcycles and am always up for a nice little ride. Maybe we can meet halfway soon. Thanks for the info, flips are all I know so I am leaning that way. I am an ex Lic. General Contractor so just going familiar. I am very interesed in learning several other avenues such as Lease Options, Assigments, and Holding/Rental Income. So yes, need various types of available, FAST, reliable funding!

Michael Woolley

Ok Tom... joined a couple of local REI Groups I found on DG site here as well as on Meetup.com...First meeting is next Wednesday. Also, when i make first deal I will join the biggest REI Group here in LA and THAT sounds like they have outstanding contacts and resources for members so I cant wait to be able to pay the membership Fee. I do hope this all leads to available Funds! Thanks for the "direction"..Best Wishes..Michael

Michael,

A good alternative to Hard Money is Private Money. Private Money is from friends and family, or co-workers, or someone you know, etc.

Usually private money costs less than Hard Money, and is easier to get if you have bad credit because it's based on if the person thinks you know what you're doing or trust, rather than your credit score or bank account.

If you show someone you know a couple of good deals you've done or even potential deals, that might open up their eyes a bit.

Remember, you aren't asking for money. You are offering them an opportunity to make money off your expertise. It's a win win for everyone!

I offer all of my private money lenders a 10% fixed return. Meaning if they loan 10k, I will pay them 1k in interest (11k total) if I pay them back tomorrow, or if I pay them back 3 months from now. It all depends on what terms you agree on. Private Money is very negotiable!

Best of luck!

There are many different avenues to look for HML or PML. As stated above REI meetings are always a good way to talk to other investors for fundinng. You don't know until you try. Networking is the key here. You can google HML's and this will take some time to sift thru the scammers and legit loaners. Caution: Never ever pay an Upfront fee to do a loan. This is a big red Flag. Don't do it. HML's charge a high interest rate 12%-18% plus points anywhere form 1 to 5 points. There is a ton of reseach to do here for you. Just make sure your deal makes sense and you can repay your debt. Much success to you...Jan

Thanks for all the insight everyone..just a little lost but trying to break thru. Jeez, much to learn! No worries, battle on!!

Hey Michael,
check out www.insiderscash.com. Just shortly they was mentioned very favorably on the IE daily wisdom. Start with wholesaling, you don't need money in most cases.
Good luck to you!
Thomas

I am in cali as well and there is tons of pm if you look. Ask everyone you know to ask everyone they know and watch what happens.The last three deals I did was other peoples money and i made the swing on the top. 35k, 25k and 8k with 8% interest for three years. Think outside the box. Also, the big reia club in LA is not that hot. All they do is sell you product. Have been there talked to people and saw all the bs...So, heads up on that one! Hope I helped...NOW GO GET SOME

Big thanks on the REI LA club, no doubt you just saved me time and money and i appreciate that. I may have located a HML will let you know next week if its real/good deal. Congrats on the 68k 3 deals also, very sweet to hear! I will also check the link from thomas. thanks again.

It's in its infancy but I started putting together this site after a bad experience with a hard money lender. My hope is that people will rate lenders and investors will be able to avoid scam artists and just bad lender. Check out the directory for California hard money lenders here: http://www.hardmoneyrater.com/hard-money-lenders/california/

VERY cool site, great info...TY

you are the first person I have sent there, hopefully it will as well received by all. Still working on the layout, how to get to the directory etc. I hope to have it all done by this week because there is starting to be a decent amount of traffic just from search engines.

Please fill out your bio; I see you are new to the site!

I have written on this before. One of my favorite places to find hard money lenders is at the Real Estate Auctions.

If you go to the auctions and someone bids they will either A) be using their own cash or B) using someone other persons money. Both can be potential hard money lenders.

Will these people be hard money lenders? Who do they use?

These hard money lenders, in my experience are the most creative hard money lenders. These lenders have to be because of the way they lend money.

Excellent Advice. Have not seen this given before on this subject. Thanks Semper Fi D-LO!

Be sure to check out if there is a Penalty for Early Payment if deal is for a specific length of time.

HML Subject Line for comment starting with "excellent advice" should have been directed to
TDSPropertiesVT. Thought my comment would appear directly after his when I hit "reply". Still learning how to respond properly. Semper Fi D-LO

Just wondering what you all do to find buyers when you are still working full time and you have limited time to build your business? The hours invested are at night or weekends...

I started in this RE business by buying & holding and now am closing on a house on Friday but want to flip it once we make it "Bright and White" as the saying goes in Dean's Circles. Where to find those folks that want to invest in real estate?

Thanks for your help!
Marilyn

Marilyn,

Try runnig an ad on Craigslist looking for investors. I did it a week ago and found a couple more buyers within 24 hours of doing this. Also look for any ad on CL that says anything about 'buy houses' (usually under real estate wanted) These a usually REIs that are looking for a good deal too. Look under real estate (still on CL) for sale (by owner) and call the ads that offer owner financing, as these people are propably investors and would at least listen to your sales pitch to them.

If you are going to wholesale to these, or any, of your buyers, make sure you have an assignment aggreement in writing before you turn over you contract. Make sure you get paid first with either a bank draft/cashiers check/cash; don't take a personal/business check from someone you don't know unless you can verify the funds AND get you money. I got this advice from another REI so I'm sharing

Hi Everyone you answered some more of my prayers and building blocks to buy properties with these types of loans, you really all very wonderful, many thanks, Jim ( can anyone tell me where on Google to get that free 800 voice mail, all I have is a cell and you cant use them on craigslist ads,isnt life fun, thanks)

Consider that most hard money lenders will not have a pre-payment penalty. If the lender does have a pre-payment penalty they are not a very good lender. Why? Because a lenders purpose is to increase their ROI. By setting a pre-payment penalty they lesson their ROI. Let me explain. Suppose a lender charges 12% interest and 3 points. Let's also suppose the lender has a 6 month pre-payment penalty. This forces us to take a loan for 6 months. The 3 points the lender charged are worth 6% return (3 points or 3% times 2 (two is the number of times 6 months happen in a year to make an annual return)) on their money plus the 12% interest they are charging. Now let's suppose the lender does not have a pre-payment penalty and they convince you to pay off the loan in 2 months. The returns are 18% (3 points times 6 (six is the number of times 2 months occur in a one year period for an annual return)) plus the 12% interest they charged.

Maybe little confusing but hard money lenders are better off not setting a pre-payment penalty - They make better returns, roll their money over more and make more money.

You need to learn and understand what exactly hard money lenders want and present the deal properly so you do not waste your time nor the hard money lenders, they want to loan money, they need to loan money to make money get it right and you get the money you need.

Now people confuse hard money and private money there is a real difference. Private money is easier to get while yes it can be harder to find it is easier because you only satisfy the persons needs and wants to loan the money while this isn't the full story it is enough for you to start thinking properly!