Hard Money Lenders~~~~~~~~

[Rod Desinord]

I am a licensed realtor in the state of Florida and I am trying to get into the rehabbing business! But I need to learn more about what these Hard Money loans are about and what the process is. I need to learn the ins and outs so i can protect myself.

[Ben Stoodley]

Hi @Rod Desinord !

Welcome to the rehab business! You're in a great location to get going on this, especially with your REALTOR experience and knowledge. We have done a lot of flips there. I am a lender on the west coast (CA, NV, AZ, TX) and wanted to give you a few tips. 

• Points/Fees: there will be a few origination points, generally 2-6 points. Generally, lenders determine the points from the term and complexity of the deal
• Junk Fees: your lender should not charge junk fees, referred to as processing fees, appraisal fees, inspection fees, etc. They can amount to around $2500 on average, and are completely avoidable - your lender shouldn't charge any
• No Pre Payment Penalty: this is very important, as some flips will happen very quickly, and the borrower should not have to pay any interest on remaining months if paid off early
• DIRECT LENDER: make sure your lender is the actual check writer, not a broker that calls themselves direct OR a lender that needs to confirm acceptance with their investors. Best test for this is to see how quickly they can close, shouldn't be more than 5 days, otherwise they may not be direct and their investors may have the final call. This can lead to being left in Escrow with no financing because your lender backs out last minute. Or just ask where their money comes from!
• LONG TERM RELATIONSHIP: this could be the most important aspect, the lender truly caring about the borrower and looking out for their best interest, as lenders are essentially their financial partner in all the transactions. 

Hope this help!

-Ben Stoodley