How Non-Banks Are Replacing Big Banks

Why Private Money Loans Are a Good Choice

Since the official start of the ongoing “Credit Crisis” back in the Summer of 2007, Private Money loans (debt, equity, and / or mezzanine) and Institutional Funds (i.e., Hedge Funds and Private Equity Firms) have provided more readily available access to funds for residential and commercial real estate investments than many of the largest U.S. banks. Non-traditional funding options have included individual investors (“Silent Partners” or Equity Investors), Crowdfunding, and Private Money or Hard Money Lenders. With Private Money, the collateral for the loan is seen, many times, as at least equally as important as the borrower’s qualifications, which provides more flexible underwriting guidelines as compared with Bank loans.

Many Debt and Equity Investors or Lenders pool millions or billions of dollars of funds from investors, and then provide them as equity money or loan options such as “Asset Based Loans” in which they are funded based upon the potential ARV (After Repair Value) or Future Value of a distressed or non-distressed property. The loans are made based upon current or future “LTVs” (Loan to Value) or “LTCs” (Loan to Cost) for a potential cosmetic “Fixer Upper”, or a deal which requires major renovation or construction repairs. In many cases, an investor doesn’t need to provide “Full Doc” underwriting items such as past tax returns or other detailed income or asset requirements.

 

Private Money Loans Excellent for Fix & Flip

For “Fix and Flip” or “Fix and Hold” residential deals, the Private Money options can be a much better option for investors since they can fund their loans much faster than government backed or insured financial institutions (“Time is money”). The difference in average funding time periods from start to finish can vary between a week or two for private money sources to well over a few months for government-backed financial entities.

In some cases, private loans may fund in a few days from start to finish with the bulk of the work completed online (i.e., title, escrow, loan, real estate contracts, third party reports, etc.), amazingly. Due to the large number of all cash buyers for properties in recent years, sellers don’t typically want to wait a few months to sell their home and close escrow. The faster an investor can gain access to funds, get formally qualified, and close escrow on a potential deal, then the more likely they will get their purchase offers accepted at the lowest offer prices possible.

 

Private Money Solutions vs. Big Banks’ Derivatives

One of the newer private money funding options in recent years is something known as “Crowdfunding” in which an investor solicits contributions from either a small or large number of people, which usually originates from the online community. Crowdfunding has been used in the past from many start-up businesses seeking cash to fund their business ideas partly since business loans from their local bank branches were quite challenging to qualify for in recent years. Crowdfunding has also been used by many Charities to either raise awareness for more individuals or groups of people, or to help pay the Health Care costs for friends and family members in need. Crowdsourcing, in turn, has been used by computer designers to share free software code, or other ideas which benefits all parties.

Even though some financial analysts and Economists have said that the implosion of the “Sub-Prime Mortgage Loan Bubble” was one of the main catalysts for the financial meltdown, the “Credit Crisis” is truly directly related to the near popping of “The Derivatives Market Bubble.” It has been suggested by a fair number of people in the financial industry that the size of the “Derivatives Bubble” (i.e., Credit Default Swaps, etc.) worldwide is somewhere within the 1,000 to 2,000 + Trillion Dollar range. As a comparison, the size of the outstanding U.S. Student Loan Debt just recently surpassed $1 Trillion, and the size of the U.S. Budget Deficit is alleged to be approximately $17 Trillion Dollars.

It has been reported numerous times that many of the Big Banks here in the USA have Derivatives obligations which far surpass the market value of their entire parent companies by a very high number. It has also been reported that 2014’s Derivatives investment dollar amounts for many of these same Big Banks are now at least 20% higher than back in 2008. If true, then aren’t the Big Banks now potentially financially weaker today than back near the start of “The Credit Crisis”?

 

Crowdfunding for Real Estate Investment

Crowdfunding has evolved in recent years to become one of the best options for people to invest in Real Estate, either directly or indirectly, after the financial markets effectively “froze” once the “Derivatives Bubble” almost completely popped back in 2008. In effect, Crowdfunding has eliminated the “Middleman”, or the Banks, and allowed individual investors to invest in discounted Real Estate assets for potentially a fraction of the current or future market values. One of the best solutions for Real Estate Funds as it pertains to the “popping” and “frozen” financial markets has been to work with individual investors directly and much more efficiently. This helps all parties focus on the best ways to generate profits with a true “Win/Win” mentality.

 

Who Reaps The Profits: Banks or Investors?

Instead of the Big Banks reaping all of the financial rewards related to their own Real Estate investments while still providing their bank customers interest rate returns of between just a measly 0% to 1% interest, Crowdfunding, and other private equity or debt options, allows the investors to share in the profits too. Crowdfunding typically offers Debt or Equity investors a variety of investment options and financial solutions with seemingly fewer risks and much higher returns than with investing their funds with their local bank branches, ironically.

In parallel with quicker lending or investment options, more buyers and sellers are matching up online through the internet, Social Media, real estate networking and investing groups, and with better access to real-time Big Data, and then are flipping and closing their home sales in a matter of a few days as opposed to a few months. These quick online home flips are somewhat akin to “Day Trading” stocks. Without the more efficient access to private capital and online real estate information, then the quickest “Fix and Flip” deals may not be as possible today.

In today’s ongoing “Credit Crisis World”, it may be more likely that an individual neighbor, a group of neighbors or townspeople, a Crowdfunding group, or a private funding company may help fund a person’s business idea, charity, dreams, or real estate investment options rather than their local bank. In any “Boom or Bust” Housing Cycle, it is truly the access to capital which typically drives the directions of the housing markets either up or down.

Hopefully, more U.S. Banks try to later follow more logical, efficient, and rational underwriting methods used by Private Money lenders or investors so that access to money becomes easier for more Americans. If you are interested in exploring the options of private money lending or private money loans, please give us a call a 707-315-1119 or fill out our borrower form or contact form and one of trained private money loan specialists will be in touch promptly to answer your questions.

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Hard Money Loans vs. Conventional Investor Loans

If You Need Capital Fast a Hard Money Loan Can Be the Answer

 

There are a lot of misconceptions regarding Hard Money Loans and Hard Money Lenders. Most of the confusion surrounds the differences between conventional mortgages and hard money loans. I wanted to take a moment and try to answer many of the general Frequently Asked Questions as well as to compare a hard money loan to a Conventional non-owner occupied investor loan.

 

Frequently Asked Hard Money Loan Questions

How does the program work?

HMLs provide Real Estate Investors access to asset based capital. We can fund quickly, typically within 72 hours of receiving the final docs from the Title Company. Hard Money is available for adequately collateralized loans on single-family residential houses and other Real Property including commercial projects.

 

What is the interest rate?

The interest rate depends upon the Lender. The rate will range from 14% interest only to 18% interest only annual interest rate payable monthly in most cases.

 

What Loan-to-Value are MLS looking for?

Typically a loan does not exceed 70% of the after-repaired-value (ARV).

 

How long is the loan for?

HMLs typically write the notes from 6 months to 12 months depending on the Lender and your needs.

 

What are the costs?

Costs vary depending on which Lender you use. All loans will require at-least a Title Policy, Vacant Dwelling Insurance, Inspection, “As-Is” Appraisal & Flood Certificate. Most require origination points.

 

Can I get repair money?

Yes. Hard money loans can fund repairs. Hard money loans require a “Draw Request” form to be filled out to identify the completed repairs to the property, Copies of the invoices from the vendors. Then, we will pay you once the work is inspected-hard money loans do not pay in advance for any work.

 

Does my credit matter?

Yes and no. For the most part, hard money loans look at the value of the property after it is repaired, how much you are paying for it, and how much the repairs will cost to determine how much we will lend. In some cases, with your consent some hard money lonas may need to checkout your credit history.

 

How do you decide how much to loan?

Typical loans range from $25,000 to $1,000,000: All loans are considered on a case-by-case basis. Each hard money loan has their own criteria.

 

Do hard money loans need an appraisal?

Yes, hard money loans require “as-is” and “as-repaired appraisals”.

 

Do hard money loans require inspections?

Yes, hard money loans require inspections including the interior before funding and before a repair draw to ensure the work is completed in a satisfactory manner.

 

Do I need to put any money down?

In most cases, Yes. Most hard money loans want to ensure that you have enough resources to finish the repairs and cover the costs of the loan plus any surprises. Therefore most hard money lonas require that origination/discount points and other required items be paid at or before closing. We are confident that if you cannot afford to close you typically cannot afford to take out this type of loan.

 

How much will my payments be?

To figure your monthly payment simply, multiply the rate by the loan amount and divide that number by 12.

 

Will hard money loans finance commercial properties?

Yes, many hard money loans will on a case-by-case basis finance commercial properties and then only if the loan is secured by improved real property such as the building and land.

 

Will hard money loans finance apartment buildings?

Yes, many hard money loans finance apartment buildings however understand that it will take us longer to get our due diligence done.

 

Do hard money loans allow interest to be deferred to the end of the loan?

Some hard money loans do. Most however have interest payable monthly. Again, we are confident that if you cannot afford to make monthly interest payments you typically cannot afford to take out this type of loan.

 

How do hard money loans compare to a traditional non-owner occupied investor loan?

You might be surprised how competitive hard money loans really are. Take a look at this comparison;

 

Comparison Matrix:

Hard Money Tradtional Lender/Mortg. Co.

Time to Close 1 – 2 weeks 4- 6 weeks

Monthly Payment ($100k loan) $1166.66 @ 14% I/O $1098.00 @ 7% + MI

Credit Qualifications None – 65% of ARV Yes – Varies

Cost to Obtain Loan 4% – 5% 3% – 6%(Incl. Orig. Fees & SRP)

Pre-Payment Yes – 3 mo. min Yes – Up to 2 years

 

In many cases an hard money loan can be obtained faster and easier then a conventional loan and while in almost all cases the amount you can borrow from a hard money loan exceeds the amount you can qualify for from a convention lender the cost difference is minimal. Hard money loans are not for everyone and every hard money lender has a different program and qualification process. However if you need fast access to capital for REI then a hard money lender such as California Private Money Lenders may be your new best friend. Give us a call at 707-315-1119 or fill out our Borrower Form or Contact Form and one of our hard money loan specialists will be in touch promptly to answer your questions.

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The Difference Between Pre-Qualification & Pre-Approval

Why These Terms Are Different

Although the terms Pre-Qualification and Pre-Approval are often used interchangeably, the two differ greatly in the process involved in obtaining them and in the benefits they provide. Here’s what you need to know about each of these terms:

 

Loan Pre-Qualification:

This is a lender’s informal way of estimating how much you may be able to borrow. It is based on the information you provide, often by phone, none of which needs to be verified or documented. Since a letter of pre-qualification gives you an idea of how much house and the amount of mortgage payments you can afford, the best time to get pre-qualified is as soon as you decide you want to buy a home.

You supply to the lender unverified information about your income, assets, debts, and possible amount of a down payment. There is no cost involved in obtaining pre-qualification, and there is no commitment for either party. Understand, however, that a letter of pre-qualification does not mean you will get a loan; it is simply a ballpark figure of the amount you can afford to spend on your home and an indication that you might qualify for a mortgage in that amount.

 

Loan Pre-Approval:

This designation is a firmer commitment on the part of the lender and requires a more detailed and formal process which includes a credit check and employment verification. You will need to provide W2’s, pay stubs, tax returns if you are self-employed, and bank and investment statements to verify your assets.

While this process is more detailed and complex, it is definitely worth your time and effort! Not only does it allow you to shop for Jersey Shore homes with more financial confidence, pre-approval also shortens the actual loan application process and often allows for quicker settlement. In addition, sellers appreciate the fact that pre-approved house hunters are serious about buying their property and that financing should not be a problem. This was shared by a East Coast Broker and Lending Firm.

 

We breakdown the basic differences between pre-qualification and pre-approval below:

Loan Pre-qualification:

  1. Informal collection of data
  1. No documentation required
  1. Verification not done by lender
  1. An estimate of the amount you might be able to borrow.
  1. Not an entitlement to a loan; simply the first step in the home buying process.

 

Loan Pre-approval:

  1. Comprehensive collection of data
  1. Documentation required
  1. Verification is done by lender
  1. Certification of how much money the lender would most likely be willing to loan you
  1. Not an absolute guarantee of financing. Funding won’t be given until after the property appraisal, title search, and any other items needing verification have been completed.

 
The best way to understand how we can potentially help you with your your private money loan is to give us a call. We can discuss your specific home buying needs and we offer personalized service and pricing. Call us today at 707-315-1119, or fill out our borrower form or contact form to learn more about our California private money loans and what California Private Money Lenders can do for you.

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First Deed Trusts-Diversify Your Investment Portfolio

Trust Deed Investments

Trust deed investments should be an important part of any investor’s portfolio. Whether a corporation, pension plan or private individual, trust deeds offer a unique combination of superior returns, outstanding security and investor convenience. What do trust deed investments provide for your investment portfolio? Read through our reasoning below:

 

Higher Returns:

All knowledgeable investors are aware of the incredibly low rates being offered by financial institutions on certificates of deposit and money market funds. Even investors with substantial assets can only do marginally better and must diversify or risk losing value to inflation. The constantly changing stock market can be even less appealing.

For the investor who desires higher fixed income returns, investing in First Trust Deeds can deliver interest rates between 8 and 12 percent. These rates are fixed and can be anticipated for the duration of the loan. Payments are made monthly and the investor receives an itemized statement for each of his loans.

 

Security:

As a prudent investor, you should always associate higher returns with higher risk. Investing in First Trust Deeds, as with other investment vehicles, are no different. They do come with the possibility of default. However, this risk is significantly mitigated by two factors. First, each loan is secured by a promissory note payable to you on a single investment property. Secondly, the borrowers are often real estate veterans who typically have high credit scores with a proven track record of success and reliability.

Nevertheless, defaults do occur. In this event you, as lender, may obtain sole possession of the property and either keep it for a rental or sell it. This fact is significant because usually First Trust Deeds are written at significantly discounted loan to value ratio, typically 60 percent or less. Investors should feel comfortable that in the event of default and foreclosure they will receive title to a property potentially with a value greater than the loan amount.

As protection to the lender all procedures undertaken by banks to ensure the security of their loans are also required when Private Trust Deed Investments are executed. Appraisals and title searches are performed. Hazard insurance is a requirement, and all transfers of monies are handled by a licensed and bonded escrow company.

 

Convenience:

An investor may choose to perform and all activities necessary to generate a real estate loan himself. For the uninitiated, this can be a difficult. Private Money Brokers that negotiate and administer their Trust Deed Notes add one more dimension to these investment vehicles, convenience.

They have the knowledge and expertise to oversee and expedite the process and to keep all aspects of the loan in compliance with regulators. They relieve the investor of the paperwork headache. All components of the loan process, from origination to servicing, can be handled or outsourced by the Broker. California Private Money Lenders will continue to monitor the loans and provide expert advice throughout the life of the loan.

The best way to understand how we can potentially help you with your trust deed investments to give us a call. We can discuss your specific investment portfolio and investment goals and offer personalized service and pricing. Call us today at 707-315-1119, or fill out our borrower form or contact form to learn more about our California private money loans and what California Private Money Lenders can do for you.

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Too Much Property For Bank Financing?

When Your Loan Doesn’t Fit the Equation

 

Real estate investors with multiple properties can face an uphill battle when looking to obtain financing for their investment properties. While income, credit and the ability to repay should be the determining factors, many funding sources cap the number of properties an investor can own. This can make obtaining financing for new properties, or refinancing existing properties, difficult at best.

 

Why You Need A Private Money Lender

We specialize in alternative financing, and our programs do not cap the number of properties that can be owned by a single investor. We can help obtain financing for most property types here in California, from residential investment property to multi-family property, commercial, mixed use, even industrial property and land. In addition, we have programs that can compete on rate.

When people think about alternative financing, private money or hard money lenders they often associate that with rates at or above 12%. We have a number of programs to fit the needs of qualified investors, even those who own many properties, that have competitively priced rates in the single digits. These programs are not limited to individuals with excellent credit, even with credit challenges we can often times offer highly aggressive pricing.

 

Many Factors Are Taken In Account

Our pricing takes into account a number of factors. Credit is one factor, but other compensating factors can overcome even the most challenged credit. Loan to value is another factor; with the right loan to value we can often times offer pricing that is as good or very similar to what we could offer someone with excellent credit.

Most of our funding is private, meaning we do not have rigid guidelines. Rather we are able to offer terms based on a make-sense type of underwriting. If the risk is lower, whether through income, assets, credit, loan to value or other factors that can be reflected in the pricing we are able to secure for your transaction. Every transaction is different and unique.

The best way to understand how we can potentially help is to give us a call. We can discuss your specific transaction and offer personalized service and pricing. Call us today at 707-315-1119, or fill out our borrower form or contact form to learn more about our California private money loans and what California Private Money Lenders can do for you.

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7 Important Hard Money Loan Facts for Investors

What To Know About Private Lenders

Private lenders have been around for, well, forever: as the saying goes, lending money is the second-oldest profession. In advanced economies today, private or “hard money” loans are used by real estate investors ranging from professional renovation investors with excellent performance records to desperate last-resort borrowers with terrible credit histories.

While there remain some back-alley loan sharks around doing shady deals with desperate investors who aren’t responsible enough to borrow from anyone else, most hard money lenders are open, ethical businessmen and women with real estate acumen and extra cash to invest. There are even some formal banking institutions who engage in hard money lending.

Here are some cold, hard facts about the hard money industry to help you determine if hard money is the right money for you.

 

Hard Money Lender & Loan Facts

Fact #1: Hard money deals are often sought after for their quick turnaround (usually within 7-14 days to process). Any investor interested in flipping a property knows that time is of the essence and needs to have funding available sooner rather than later.

 

Fact #2: One way in which hard money lenders differ from more conventional lenders is in the fact that many hard money lenders tend to be local and more hands on in terms of wanting to view the property before lending money on the deals.   Hard money lenders want to get that up-close-and-personal look and feel for a property before making a decision to lend on a property.

 

Fact #3: Hard money loans are generally much more expensive overall than conventional loans for both the interest required on them as well as points the buyer is expected to pay on them. Generally speaking, investors seeking hard money can expect to pay anywhere from 10 to 20 percent interest and get hit with as much as eight points with some lenders in some states.

 

Fact #4: Hard money loans are most often sought by investors doing short term deals rather longer term deals. Most hard money lenders will lend from periods of six months up to a few years.

 

Fact #5: While the red tape is certainly less and the turnaround time is much faster, more hard money lenders are taking a closer look at borrowers’ experience and credit history. After the real estate crash of the late ’00s, many lenders were triply burned, as borrowers defaulted, but foreclosures were slowed to a crawl for political reasons, and values had crashed. So while ten years ago lenders were more open to lending money as long as there was sufficient equity, today they tend to be more conservative and screen out rotten-apple borrowers more thoroughly.

 

Fact #6: Most private lenders require borrowers to use a specific appraiser who the lender knows and trusts, who will not be swayed by the investor’s pleas for padding the value.

 

Fact #7: Most hard money loans are structured very similarly to balloon payments with due dates usually spread over no more than one to two years after the loan is issued.

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3 Must Haves Before Getting Your First Fix & Flip Loan

Fix & Flip is Simple But Not Always Easy

 

Investing in a run-down, abandoned home and fixing it up so that it can be sold for a profit is a popular way to get involved in the real estate industry. There are plenty of television shows that make it seem like a fast, easy way to make big money. While profits can certainly be made, you first should make the time and money investment to get there. Unless you have a large amount of cash lying around, you will most likely have to obtain a loan for the purchase and rehab. Here are some things you need to know before getting your first fix and flip loan.

 

You Still Need Cash

In the majority of cases, you won’t be able to finance 100 percent of the sales price and the cost of renovations. You’ll likely need a substantial amount of cash in order to make the deal attractive to your lender. This is true whether you’re applying for a traditional loan, or if you’re seeking a loan from a hard-money lender. A good rule of thumb is to have at least 20 percent of the amount you expect to need in capital reserves before you go to a lender. Remember, the more cash you have on hand, the lower the loan amount and fees will be.

 

It’s Not Always Easy

If you have less than perfect credit, and you’re new to the fix and flip world, you’re likely going to run into roadblocks along the way. Traditional mortgage lenders, banks and credit unions view these types of investments as risky, and therefore avoid them. Loans of this nature also take a great deal of time to finalize, which could mean losing the opportunity and having to start over. Hard-money lenders, on the other hand, aren’t as concerned with credit scores as they are with the potential the borrower has to complete the project and pay back the loan. They are more likely to release funds quickly, even to a new borrower, thus making the process faster and easier.

 

There Is Risk Involved

Even if you do thorough market research, investing in real estate is a risky business. There will never be a guarantee that your property will sell, especially in a narrow time-frame. As with any other investment, you should be prepared for the possibility of losing money on a fix and flip deal. You can mitigate some of the risk by seeking the advice of others that are successful in the business. Hard-money lenders are generally very experienced and willing to assist borrowers, unlike their traditional loan counterparts. Just keep in mind that no matter the outcome, you are responsible for repaying the loan in its entirety within the specified terms.

As a house flipper, getting a hard money loan is a viable option. If the loan to value ratio is high, give us a call at California Private Money Lenders at 707-315-1119 or fill out our Borrower’s Form or our Contact Form and one of hard money loan specialists will be in touch promptly to answer your questions,

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Where To Find Hard Money Loans for Real Estate Investments

Bank Lending vs Hard Money Loans

While bank lending can still be challenging to source, hard money loans are relatively easy to find. The challenge comes in finding a good hard money lender that will offer you fast execution, competitive rates and ongoing service. Those three qualities separate the market’s best alternative financing sources from others.

Once you know where to look, hard money lenders are all over the market. A simple Internet search can turn up more lenders that you’d ever be able to do business with. Talking with a real estate agent or with a mortgage broker that is experienced in the investment real estate market can help you to narrow down the list. Attorneys, 1031 exchange qualified intermediaries and other people that are active in the market can also make recommendations.

 

What To Look for In a Hard Money Lender

When you find a prospect to provide you with hard money loans, here are a few things that you can look for:

 

1.State licensure. Whether or not a lender technically needs to hold state or national licensure, knowing that he went through this extra step is a sign that he’s serious about the business.

2.Flexible lending terms. The benefit of taking out hard money loans is that you can tailor the transaction to your needs, and the right lender will be able to work with you. This doesn’t mean that the lender will offer rates that are comparable to what you’d get at a bank, if you could find a bank to lend to you. What it means is that you’ll get competitive rates and underwriting that make it possible for you to do profitable leveraged deals.

3.Fast turnaround times. Private lenders should be able to pre-qualify you to offer you a proof of funds letter and should be able to close a loan in no more than three weeks. This is fast enough to let you compete with all-cash buyers but also leaves enough time for you to know that your lender is doing appropriate due diligence.

4.Membership in appropriate industry associations. A lender that is a member of the American Association of Private Lenders, for instance, has invested in his business and, even more importantly, has signed on to the Code of Ethics that protects you as the borrower.

5.Industry experience. Hard money loans from lenders that know investment real estate frequently come with help from experienced partners. They can also be easier to close, since your lender understands your needs.

California Private Money Lenders is your go-to source for private money loans in Sonoma County and Northern California. Give us a call at California Private Money Lenders at 707-315-1119 or fill out our Borrower’s Form or our Contact Form and one of private money loan specialists will be in touch promptly to answer your questions about private money loans and private money lending.

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Finding a Great Hard Money Lender

Finding a Great Fix & Flip Hard Money Lender

Fix and flip investing is part art form and part business venture. As a real estate investor, you know the importance of doing your homework when choosing a fix and flip property to rehab for profit. You have built relationships with realtors, property inspectors, contractors, and others in related industries to maximize your chances of success. You understand the proper way to figure appropriate ARVs for each property you consider. And you have a real eye for finding those diamond in the rough properties that others overlook when it comes to property searching.

But all these skills are of little benefit if you cannot secure the right financing at the right time. So, the question becomes how to find the right hard money lenders for your REI team. Distilling the selection process down to these four basic points will do much to ensure your success with finding the proper hard money lenders for your situation.

 

  1. Funds Availability:

Due to the nature of fix and flip investing, quick turn around time for funds availability is a must. Knowing that your lender is ready and able to immediately fund your offer gives you the leverage you need to negotiate effectively with the seller. The reality of having readily available funds is a large incentive for sellers to accept your offer quickly.

 

  1. Reasonable Terms and Finance Rates:

What percentage of ARV will your lender finance? What will the interest rate be? And perhaps most importantly, how flexible is your lender regarding the length of the financing term? As a fix and flip investor, you know that these things matter, as changes in the housing market can affect the length of time it is prudent to hold a property before flipping it. A lender willing to consider the issues inherent in a fix and flip deal is essential to the process.

 

  1. Good References From Other Clients:

Can your lender provide references from current or previous clients? Speaking with others who have worked with your lender can provide valuable insight into a lender’s standard practices and the quality of your lender’s customer service.

 

  1. Licensed, Bonded, and Insured:

Will all funds be handled by a licensed, bonded, and insured company? It almost goes without saying that this requirement is necessary, as it offers a layer of protection that you would not want to be without.

Just as you have developed relationships with realtors and contractors, developing a relationship with a reputable hard money lender is essential to your investing success.Give us a call at California Private Money Lenders at 707-315-1119 or fill out our Borrower’s Form or our Contact Form and one of private money loan specialists will be in touch promptly to answer your questions about private money loans and private money lending.

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5 Point Hard Money Loan Checklist

Your Hard Money Loan Plan

There is no doubt that when looking to make a real estate investment, choosing a hard money loan is a great option. However, many people do not get approved for the loan because they were caught off guard with the loan application requirements. To ensure a better chance of having the loan approved, check out our checklist below.

 

The Hard Money Loan Application Checklist

 

Location:

It has taken some time, but you have found the right investment. However, the location may not be in the best of neighborhoods. This will quickly send a red flag to your lender. The collateral for the loan is intertwined with the investment property. The lender will only give you a loan if they feel that their investment is safe. You should have pictures of your property as well as the surrounding areas to give to your lender. This will allow them some visualization into what they are loaning their money to. Having a number of comps for the properties that surround yours will be helpful as well.

 

Repayment Plan:

How are you going to repay the loan at the end of the term? Hard money loans are for a very short time period. You are going to need a plan on how you will be repaying the loan. Whether you hope to sell the property or refinance it, your lender is going to want to know your exit strategy.

 

Documentation:

Even though the hard money loan is all about the investment property, your lender may need other documentation. They may ask for income verification, what other assets you may have, and what your credit is like. Having all your documentation together and organized will make for an easier process.

 

Bring Your Game Plan:

The Hard Money Lender or Private Money investor is going to want to know what your game plan is. If you are going to renovate the property, make sure you bring all quotes from any contractor that you have talked to. By specifically laying out your plan and the costs associated with the plan, your loan is more likely to be approved. If you have made investments in properties before, show your lender what you did with them. Your experience and track record will count.

 

Step-Up:

Make sure that you are ready to step-up to the plate. If your lender calls, do not wait two days to return their call. A sense of urgency is important with these lenders and they need to be reassured again and again that you really want this loan. If more documentation is requested, try to get it to them within a 24 hour window. This is not the time to lay back and wait to see what happens. If you want the loan, it’s up to you to communicate in a timely manner.

Give us a call at California Private Money Lenders at 707-315-1119 or fill out our Borrower’s Form or our Contact Form and one of private money loan specialists will be in touch promptly to answer your questions about private money loans and private money lending.

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