Where to Find Brokers to Lend Out My Capital?

[Jeff Lawlor]

I'd like to enter the private/hard money market as an investor with money to lend. I don't want to find/underwrite/service the loans. I'll let a broker do that and earn a cut for their efforts. My problem is a lack of deal flow.

I reached out to private lenders in my community. Lots of deals "in the works" but nothing at the moment.

Unless find a way to get more deals in front of me, two things will happen:

* My money will sit idle while waiting for a deal, reducing my effective yield

* I may have to settle for a lower return among my few choices

How do I go about opening the deal flow floodgates?

[Mike Klarman]

sent you a message Jeff.

[Jeff Lawlor]

Quote from @Rob K.:

Having money idle is an issue with hard money lending. One way to try to minimize this is to eventually ladder your capital into several deals so that when payoffs come, sometimes unexpectedly, not all your capital is idle. I utilize a brokerage account with wiring capabilities for my idle hard money capital with idle cash placed in short term t-bills currently yielding around 5.3-5.4 %. If I have a deal, the t-bills can be sold and cash is available for funding the next business day.

Thanks, @Rob K. All great advice. I love hearing real-world stories from the investor-side.

Most of the information out there is either about how to get a hard money loan or how to run an entire hard money business. It's difficult to find info pertaining to individual investors with money to lend through brokers.

[Jeff Lawlor]

Quote from @V.G Jason:

Can you really do much with $125k HML? I mean everything I've seen or talked to we're doing at minimum in the $400-$600k ish range, but maybe I am talking to the wrong people. I've done a few, think lowest I lended was $300k, highest was like $770k.

Being a HML is incredibly complicated, and time consuming. I like the idea of the it, I love the yield and asset-backed nature but **** this is the hardest thing I've done in some time.

At $125K, I'm probably bundling with other investors. Since this will be my first loan, I want to limit my exposure while gaining experience. If this works out well, I plan to invest up to $1M by the end of summer.

Yes, the business is incredibly complicated. That's why I want to leave the marketing, underwriting, servicing and potential default negotiations to the professionals.

My role is to evaluate loans based on my needs and risk-tolerance. I feel comfortable doing that.

[Jeff Lawlor]

Quote from @Scott Trench:

Look up the hard money lenders here on BP. Call them up and ask them for two things: 

1) To review their funds. Many of these lenders have private debt funds, which achieves your objective. Be wary, each fund has risks (some are "levered debt funds", some lend in second position or at higher LTV than you will like, some may lend in regions that make it difficult to foreclose, some may charge high fees or offer low returns).

2) To ask them if they have any notes for sale - Be warned, lenders may try to offload the loans that they don't want to keep on their balance sheets. You need to do your homework on each loan, property, and borrower. 

There's no free lunch, but becoming skilled at evaluating and purchasing notes or evaluating and investing in credit funds can be a great way to drive passive income. I personally have bought notes from two different HMLs on BP, and have had all interest paid, and all capital returned on loans that have reached maturity so far. 

Thanks for the great tips, @Scott Trench. It's great to hear from you personally.

You make a really good point about being clear about criteria for LTV, seniority and more. I should tighten that up.

And really good warning about avoiding loans that lenders are trying to off-load. My biggest role in this is due-diligence and that's something I excel at.

BP is always my first stop for real estate advice because everyone here is so helpful and knowledgeable.

[Jeff Lawlor]

Quote from @Jeff S.:

Thanks for the shout-out, @Jay Hinrichs.

Now that you advertised you have money to lend with no criteria, @Jeff Lawlor, you’ll hear from everyone and their brother, nationwide, looking to extract it from you. Most will be honest and well-meaning. Some, less so. There is a huge amount of bluster and fake-it-till-you-make-it out there. Those beating their chest claiming they are drowning in applications either have low criteria or are exaggerating. Go slow, be patient, and educate yourself first. @Rob K. gave you some great advice.

Thank you for that wealth of information gained through your years of experience. It's very valuable. It will definitely help tighten up my criteria.

Here's what I'm thinking now in terms of criteria:

* Term: 6 - 12 months
* Annualized rate: 14% (this capital is competing with other income investments such as mREITs, BDCs and covered call funds. If the rate is much lower, it less attractive to me, especially because there's no capital appreciation. Though diversity is still important.)
* Loan seniority: First position has always been the goal. At least one of the local private lenders said they typically only do second. Another reason why I'm branching out from my local market.
* Purchase criteria: Spending so much time on BP, I'm most familiar with fix-and-flip and construction loans. They also offer the time-frame I'm looking for. I'd certainly evaluate other types of loans, though I'd approach them much more cautiously.
* LTV/LTC/ARV: I am fairly risk-tolerant. At the same time, this is a new type of investment for me. To start, I'll stick with the standard numbers of 90%/80%/70% until I feel comfortable taking on more risk.
* Property location: Visiting a property in person is valuable. However, I'm having trouble just finding deals in my area, let alone good ones. I'm expecting, as an investor, not to be intimately involved in foreclosures. Perhaps I'm overlooking something, though.
* Business purpose only: I've heard the warnings and I'm with you there!

I appreciate you taking the time to offer all these tips. It's really helped me think more clearly about criteria and now it's laid out here.

Thanks, Jeff!

[Jeff Lawlor]

Quote from @Matthew Seyoum:

Are you looking to lend bridge loans or longer term debt? We may have some secured options on SFR flips in the $200K range! We are used to paying 12 points.

I'm looking for shorter term loans. That sounds great! I'll reach out.

[Brandon Croucier]

Would love to connect with you, we love working with private money lenders who are looking for a solid return.

[Jeff Lawlor]

Quote from @Brandon Croucier:

Would love to connect with you, we love working with private money lenders who are looking for a solid return.

Thanks, Brandon. I will connect.

[Jay Hinrichs]

Quote from @Jeff Lawlor:

Quote from @V.G Jason:

Can you really do much with $125k HML? I mean everything I've seen or talked to we're doing at minimum in the $400-$600k ish range, but maybe I am talking to the wrong people. I've done a few, think lowest I lended was $300k, highest was like $770k.

Being a HML is incredibly complicated, and time consuming. I like the idea of the it, I love the yield and asset-backed nature but **** this is the hardest thing I've done in some time.

At $125K, I'm probably bundling with other investors. Since this will be my first loan, I want to limit my exposure while gaining experience. If this works out well, I plan to invest up to $1M by the end of summer.

Yes, the business is incredibly complicated. That's why I want to leave the marketing, underwriting, servicing and potential default negotiations to the professionals.

My role is to evaluate loans based on my needs and risk-tolerance. I feel comfortable doing that.

 its not legal to  do fractional interest in mortgages  in every state so make sure your up to speed in that regard. 

[Jeff Lawlor]

Quote from @Jay Hinrichs:

 its not legal to  do fractional interest in mortgages  in every state so make sure your up to speed in that regard. 

Good point. Thanks.

[Jayden Sink]

I have been doing real estate wholesales for 3 years. I have just started brokering relationships between my massive buyers list and lenders like yourself. I sent you a message i would love to chat with you over a call. I figured there should be more than one way I can monetize that list. Currently I only have 2 partnerships, one with RCN capital and one with a private lender like yourself.

[Timothy M Kolb]

Quote from @Jeff Lawlor:

I'd like to enter the private/hard money market as an investor with money to lend. I don't want to find/underwrite/service the loans. I'll let a broker do that and earn a cut for their efforts. My problem is a lack of deal flow.

I reached out to private lenders in my community. Lots of deals "in the works" but nothing at the moment.

Unless find a way to get more deals in front of me, two things will happen:

* My money will sit idle while waiting for a deal, reducing my effective yield

* I may have to settle for a lower return among my few choices

How do I go about opening the deal flow floodgates?

 Hey Jeff I sent you a request, let’s connect!

[Gaetano Ciambriello]

We broker private money loans to investors in the states we are licensed in (although most of the business is NJ, PA and the Northeast).

We originate 1st lien position loans with attractive LTVs.

If you would like to chat further, I would be happy to connect and then show you a couple opportunities as they come up!

[Kyle Fronk]

Quote from @Erik Estrada:

What states are you open to lending in?

I have a large tax client base of real estate investors. We are in need of additional funding for many of these folks. I underwrite the loans 

[Timothy M Kolb]

Quote from @Jeff Lawlor:

Quote from @Brandon Croucier:

Would love to connect with you, we love working with private money lenders who are looking for a solid return.

Thanks, Brandon. I will connect.

 

20% annualized 3-12mos per loan, 1st position or cross collateral only of 1x minimum 

[Karen Chow]

If you're interested, we offer 12% amortized over 5 years, on a $30,000 loan, backed by real estate. You would be the first and only lien on the property. If you're interested, you can message me, and I can send you some more information about it.

[Robert Ellis]

Quote from @Jeff Lawlor:

I'd like to enter the private/hard money market as an investor with money to lend. I don't want to find/underwrite/service the loans. I'll let a broker do that and earn a cut for their efforts. My problem is a lack of deal flow.

I reached out to private lenders in my community. Lots of deals "in the works" but nothing at the moment.

Unless find a way to get more deals in front of me, two things will happen:

* My money will sit idle while waiting for a deal, reducing my effective yield

* I may have to settle for a lower return among my few choices

How do I go about opening the deal flow floodgates?

 I'd look at doing development deals as well. you can do joint venture, non recourse debt above 5 million in construction. we do deals in Columbus Ohio and miami florida if it is of any interest. columbus cost per door is much lower than in miami and we focus on micro units under 600 sq ft mostly for development to get higher density, higher lease prices per square foot, etc. there is a "affordable" housing deal that has 336 sq ft studios in columbus that gets about $995 in rent which is above $3. the normal single family rental gets in the $1.6 or so range even new construction