Truths about Hard Money and other REI FACTS.

Taken the time to check this out!

I'm a little new at this. Can you explain Hard Money Lending? Thanks

"Usury is the practice of charging excessive, unreasonably high, and often illegal interest rates on loans." I quote this from Wikipedia because that is how my local hard money lender (HML) defined it to me, as "legal usury". Tongue in cheek of course, but it's pretty accurate. Seriously though HM can present a good alternative for funding a deal, and in fact, can be part of a no money strategy, none of your own that is. OPM, other people's money, at a high cost. So a hard money lender does not look at you - your credit, your income or anything else. They look at the deal and if they think its a good enough deal they will loan you the money, probably for 3-5 pts and 12% (or more). The loan is short term, usually not more than 6 months. Some will even loan 100% plus repair costs, and possibly even defer payments. If you figure these costs into your numbers when you analyze the deal, it can be a good option.

Michael,

thank you for sharing this interview-watched it and it has great information!
great tips!
Everyone who is considering using HML should watch this video...

wishing everyone success,

Valerie

Despite what is widespread about HML qualifing just based on the deal, when it comes time to FUND an ACTUAL deal they WILL check your credit history. Not your credit score.
Say you have filed bankrupcy or have a history of late payments. They won't loan to you. They also check your bank account to verify you have the means to pay the interest payments. I highly recommed watching the video in my first post, as it has an active, real HML explain how it works. If you produce a 30 cent on the dollar deal after repairs than he MIGHT fund you based on the deal only. He can foreclose when you can't preform and still make money. Most people have GREAT difficulty finding 70% ARV after repairs, right?

Check out the video. Real investor turned HML, still investing. This is real world information.

Michael Mangham
MD Home Acquisitions LLC

Glad you liked it, hope a lot of DGers will watch, listen and learn. It can save some heart ache and disappointment to know some of this stuff. Help people to get ready to do a deal and not waste time with people that are not really HM lenders at all.

Michael Mangham
MD Home Acquisitions LLC

Watched it...well worth the time. Thanks for posting.

before getting my first HML. Thanks for sharing! In CA its even worse.

Michael for looking out

Great post with valuable information. It pulls away of cloak of mystery about HML's that new investors need to know. Also like his comments on being a landlord which we are and we have a variety of tennants. Never a dull moment being a landlord but it is still a great way to build your portfolio.

As usual you and Bill always come up with great info to post...Jan

Michael,

Thanks for sharing the video. It has some great information. It's encouraging not to be so afraid of HML. Thanks again.

Cheryl & Dave

You guys are all very welcome. Hope it helps some new people.

Michael Mangham
MD Home Acquisitions LLC

Thanks Michael!!! That saved me alot of wasted time and questions. Real need to know info!

Michael, thanks for sharing this. I see myself using this tool in the near future.

Definitely gave me some insight.

Everyone on this site should watch this video and learn about HML...

Wishing everyone success,

Valerie

what a great interview. There were some real nuggets of truth on HML but also about being a landlord. Thanks for sharing.

PS - The interview is rather long but it packs in a lot of info.

Micheal Thanks a good one to share, everyone should watch it.

Just looked at your latest rehab. How many roll offs did it take? 4, 5?

Glad you enjoyed the video.

Michael Mangham
MD Home Acquisitions LLC

Michael,

just wanted to give people another chance to see this...

Valerie

Great information in the video. Thanks for sharing! I've used HM on several of my deals and it got me started. However, once I realized that HML's were essentially brokers for private money I decided that it could save significantly on the points and interest dollars that I was leaving on the table if I had my own private money resources. After all using Dean's techniques to find deeply discounted properties I could offer the investment potential of getting a 10-12% return on one's investment dollars and in today's economy that is a very good rate of return. The key is presenting the opportunity as just that a relatively safe investment opportunity secured by real estate. So just like building a buyer's or sellers's list I'm now working to build up my own pool of private mony investors.

Micheal 5 40yders just to empty it, 2 more for the rehab.

How did you walk into the place!! That is alot of junk!

Everyone that has not, should watch this video.

... and free to anyone who wants to learn something about HML...

Valerie

What else are you doing on a Friday RE night?

Thanks Michael.

Great insight on HML and even some helpful advice to new landlords. It's great to see someone really being honest about the process of qualifying. Most say they just qualify the deal but not the lender until you look at their application (or whatever they choose to call it) and see otherwise. Very helpful in preparing us to talk with a lender.

Steve

http://www.pinefinancialblog.com/biggerpockets_interview/

Any one considering a HM loan should watch this. No sales, just education.
If you are looking for HM in Colorado, Kevin is the man.

Michael Mangham
MD Home Acquisitions LLC

Any reccommendations on where to look for legit HML's in any area?

I am thinking of using a HML to back up my wholesaling just in case a buyer does not perform and I have a killer deal that I can flip fast.

I have contacted a local hard money lender and she said she wouldn't fund my deal unless I have some "skin in the game". She wants collateral from a property with equity (if I had that I wouldn't need hard money!!!).
Where can I find hard money to finance a great deal. I have decent credit, 650-680, I have no down payment, and I need between $120K-$145K.

"No skin in the game" was 2008. Unfortunately almost all HML's these days will require some money down, a great deal, and a proven track record. Too many HML's got burned in the financial crisis and went out of business. The remaining ones are much more cautious.

Mike's comments at the top of this post and the video really do a great job explaining how things are done now!

- Tom