I met with a few local investors this weekend, and after sharing stories, I figured I would write this post. There are so many “Pretend Hard Money Lenders” out there these days that I wanted to list a few things you should look out for when you’re looking for a loan/lender.
*Please note – this is pertaining to 1-4 unit residential properties only (not commercial properties as some of these don’t apply on larger commercial deals) and this pertains to Hard Money Lenders – Not your local private guy down the block who is still trying to figure out how to lend money and not blow himself up at the same time.
- The lure of 100% financing – does this sound familiar “if your deal is good enough we will lend you 100% of the purchase, rehab, closing costs and all the payments” you just pay us when you sell the property. Come on.
- No monthly payments – A real lender lends his money for a guaranteed rate of return on a monthly basis. A true lender knows that an “end” to your loan is NOT always a guarantee.
- No credit or experience needed – Seriously? You don’t pay your bills, you have bad credit, have never done this before, but yea we will take a shot and lend you money on the future value of a property and let you learn along the way on our dime.
- Upfront fees – AHH.. the dreaded upfront fee. The only thing you should pay out of pocket is the appraisal cost and to the appraiser directly. IF you have a lender that balks at that, or makes you pay other “fees” up front, run, run like the wind. Chances are they will find a way not to fund your loan.
- Terms that just blow away everyone else you have spoken with – there is no secret to lending, no magic loan out there. If you call 10 lenders and 9 of them are in the same ballpark, and you think you have found gold in #10 because he is MUCH cheaper than the other 9, run and run fast. Real lenders know what their competition is charging in that area. Think about it – if you have money to lend, aren’t you trying to get the most for your money? Of course you are, so if 9 people tell you 12/13% and the 10th tells you 7,8,9% , that should raise a HUGE red flag in your mind.
- Ask them to speak with the last 5 borrowers they have closed a loan for! If they balk at this or cannot provide it, then they are not closing loans PERIOD.
I know everyone has their stories on the 100% funder that doesn’t care about credit, money in the deal, your income, your ability to service the debt or your experience. You’ll realize those are the guys that want you to fail so they can take that deal from right under you.
If you are looking for a good hard money lender we have funds to lend!! Send us your deal to review today.
NLDS Corp HardMoneyMan.com or call 866-461-2695