You Want a Hard Money Lender If...
Your deal is Short-Term and Sure-Fire...
Wholesale Selling is the perfect example...
But first, I get this question a lot, "Can you help me find a hard money lender"?
Using a Private Lender is very Expensive.
All the risk is on you, The Real Estate Investor / Rehabber.
Here is the problem...
- You Think you found a great deal
- All you need is the Money
- The fix-up will be easy and fast
- This one will sell in a heart-beat
- I'll make a ton of money on this one
Oh how I know so well, to get all excited about finding a great deal. It is down right addictive! That's when the problems begin...
It's so much like falling in love but it's actually greed that's playing with your emotions.
A Hard Money Lender is Great, when...
- The terms are affordable to you,
- The payback time is weeks, or a few months,
- You don't put your home up for collateral,
- You don't jeopardize family and friend relationships,
- Your exit strategy is sound,
- And you're sure your profit is more than the cost of borrowing the money.
A hard money lender, has money, because they've been very responsible with their money (aside from inherited money).
- They worked for it,
- They saved it,
- They invested it,
- They protect it,
- They focus on keeping it safe and secure...
And they just don't lend it out easily without strict terms, a much better rate of return, than they're already getting.
Some Rehabbers and Real Estate Investors, who "want" a hard money lender, tend to have the exact opposite respect for money!
Rehabbers and Real Estate Investors tend to be risk takers.
People who've accumulated money tend to plan safe and secure havens for their money including FDIC insured deposit accounts.
You Don't Qualify for a Mortgage Loan!
Of course that's not the only reason, but it's a biggie! If the banks won't lend you money...
Chances are a private money lender would be skeptical to lend you money as well...
Unless they personally know you.
My best advice is to have a sound written plan,
that's understood by both parties,
when you're dealing with lenders you personally know.
Getting prepared in advance before you invest in real estate makes the most sense!
But you bought a real estate investing program...
- With strategies to make a ton of cash,
- In a short period of time,
- Using other people's money,
- While having bad credit,
- And no money of your own...
Okay, it can work that way when you can find "low priced" properties, and have "buyers waiting" to buy from you at a higher price.
Wholesale Buying - to - Sell to Investors you have waiting, is probably one of the best examples, to use a hard money lender.
CAUTION: The time between - Buy - - -and - - - Sell - can be months! And some cases it can take years to sell a property, when you don't know "who exactly" will be buying your property.
If you know what you're doing...
Hard Money Lenders Make Great Partners when:
- You have a lead generation program to find discounted properties,
- And you have a list of wholesale buyers (Real Estate Investors and Rehabbers) waiting.
This program works in reverse...
- Develop your list (relationships) of wholesale buyers (Rehabbers),
- Know exactly what they want to buy, and how often,
- Develop your list (relationships) of hard money lenders,
- Know exactly how much money you can borrow on a days notice,
- Develop your, "finding discounted property system",
- And start filling orders...
As you can see above, that's an office job...
It happens to be similar to a Realtor's job!
The wholesale selling method is a way of being a Realtor without a license.
If that's what you want to do???
Land Contracts and Hard Money Lenders
When you find a private lender who is willing to:
- Lend money for 7-10 years,
- With flexible terms,
- Hold the Deed to the property,
And take an active roll in Local Community Activity...
Take a closer look at land contracts and avoid all the excess fees from using mortgages.