| Private lending is a world unto itself. Completely | | | | Here's another example. Let's say you have a credit |
| different from the snobby banking process we're all | | | | score in the 400 range. Institutional banks won't even |
| used to. Fact is, using this fast and easy money to | | | | talk to you, no matter how much equity you have. |
| solve debt problems is a true "God send" if and when | | | | So you get a "hard equity loan" make some |
| you need it. | | | | payments, get your credit cleaned up in the mean |
| While it can come with slightly higher costs, the | | | | time, and then you refinance the loan to better rates. |
| benefits are through the roof. I'll even show you how | | | | But the point is you get your money now! Not later. |
| to use them to flip real estate for instant profits. | | | | Example #3. You just started a brand new business. |
| What exactly is a hard money lender? | | | | Banks want 2 years of tax returns or proof you've |
| First off, they're people -- with lots of money. They | | | | been in business for 2 years. But you just started 6 |
| lend their money to people and businesses in return | | | | months ago! No problem. A "hard money loan" will get |
| for a rate of interest. They always lend in the form | | | | you the cash you need to do whatever: fund your |
| of a mortgage against some type of residential or | | | | business, pay off debts, or anything you want. |
| commercial property or raw land. | | | | With all of the crazy talk about a "mortgage |
| They are also called "hard equity investors" or "hard | | | | meltdown" and foreclosures today, private money |
| money lenders" or just "private investors". The | | | | can be a true life saver for those in need. |
| interest rate varies but is always higher than | | | | Can you buy investment property with a hard money |
| "banking" rates. But it's also without "banking hassles"! | | | | loan? |
| When you want a "hard money loan" you won't care | | | | Yes. One client of mine, with great credit, only had to |
| about the rate. You'll only care about the money and | | | | bring about $1,500 to closing and the private lender |
| the problems it solves. | | | | gave him enough money to buy the "fixer upper" and |
| Which is also what makes them unique. They solve | | | | lent him the money to fix it up! The house has since |
| problems. | | | | tripled in value. That's pure cold cash in the bank. |
| How ugly-of-a-situation will they lend on?high | | | | Everyone needs to know somebody with good |
| debts,bad credit,hard to prove income,no | | | | access to private or "hard money" lenders. You never |
| credit,unique | | | | know when you'll need one. Find a great deal on a |
| property,bankruptcy,foreclosure,commercial purchase | | | | house you want to flip? No problem, private |
| or refinance loans,consolidate bills,bank turned you | | | | investors. Buying a commercial building that's worth |
| down, etc.raw land | | | | double what you are paying for it? No problem: |
| Need lots of money in three days? No problem. | | | | private investors. |
| They'll lend to you when nobody else will. They'll stop | | | | What makes my hard money unique? |
| foreclosures and bankruptcies and they'll give you | | | | If there is one problem with private investors it is |
| money even if you have the worst credit score on | | | | that they are very difficult to find. I'm not talking |
| the planet. | | | | about the institutional lenders that "say" they are |
| What's unique about these "hard money lenders" is | | | | private hard money lenders. But the real private 'hard |
| this. | | | | money' investors. |
| 1) They don't ask for two dozen forms of ID, your | | | | If you do a search on Google you'll see tons of |
| DNA and the rights to your children. They only look | | | | people claiming to be hard equity investors, but they |
| at the value of the property or business they are | | | | are really just institutional banks looking to charge |
| lending money on. The property is the most | | | | high rates to really good customers. And those |
| important part of their decision. You, as a borrower, | | | | sharks turn down more stuff than they approve, or |
| are not scrutinized. In short there has never been an | | | | the lend you so little money you can't make the deal |
| easier loan to get approved. No tax returns, no bank | | | | work. And some are really just looking to steal great |
| statements no letters of explanation. No nit picking | | | | deals right out from under unwary clients. They could |
| "stipulations". | | | | care less about lending. It's scary, but true. |
| 2) They, alone, make the decision to lend or not to | | | | The real private hard money lenders can't be found |
| lend. They don't have to "run everything by" some | | | | online, yellow pages, or the newspaper. Most of them |
| wicked hook-nose underwriter. It's usually just one | | | | are reclusive, and to be blunt, a little eccentric. You |
| person making the decision. And they make that | | | | just have to know them. You have to cultivate them. |
| decision quickly. Usually within a day or two. | | | | My private investors have taken me over 12 years |
| So how much will they lend you? | | | | to find. |
| Usually it's about 65% of the property's value. So if a | | | | When you do find them, you have to guard them |
| home is worth $200,000 they'll lend about $130,000. | | | | like a pit-bull. That means protection from |
| The loans are usually interest only mortgages (which | | | | competitors, and it also means you don't burn them. |
| keeps the payment lower) and they can close in | | | | Ever. |
| about 3-14 days! That's fast in mortgage lending. | | | | That's where the trust comes in. I never B.S. them or |
| So let's say you lost your job and you're behind on | | | | sugar coat things when presenting a deal. They're |
| your mortgage by 4 months. You just got a "notice | | | | extremely wary people, but if you treat them right |
| of default" in the mail and the lender is going to | | | | and shoot straight, they come to trust your word. |
| foreclose on your home. You have to save your | | | | What this does is gets deals done that otherwise |
| home. No bank will touch this type of loan. | | | | would have been turned down. |
| So, if you have enough "equity" a private lender will | | | | On top of all that, hard money lenders will lend on |
| pay off your old loan - catching your payments up - | | | | properties which are unusual. They each have their |
| giving you a chance to get back on your feet. Then | | | | preferences, but if the equity is there, someone will |
| when you've made a 12 or so payments on time | | | | "pony up" and get your money to you. |
| with the private, you might qualify to go back to a | | | | When you need a private investor, you'll be glad you |
| lower rate mortgage lender for refinancing. | | | | know one. |