Hard Money Lending ?s

[Kris Fox]

I would like to get into lending. What steps do I need to take? I know of plenty of people looking for hard money, I just need to know the right steps, so I can move forward. I have the money and want to lend out. Any good resorces out there?

Thanks,

Kris

[Account Closed]

Thanks for the compliment, Jon. :D

Back in the day (1999 - 2004) we loaned to 80% ARV but the max we will do is 70% and that appears to be serving us well. Our program is very specific - for rehabbers only and it is a private loan not a hard money loan. Meaning I underwrite it exactly as a conventional underwriter would in terms of income, assets, DTI and the borrower's credit. In addition, we are very careful with values. I work with one appraiser and one appraiser only. No exceptions.

I am proud to say that I've been brokering and personally underwriting this program in CO since 2002 and we have never had a foreclosure. We have had 3 deeds in lieu that we turned for a small profit and have had several note extensions but so far no foreclosure so I think we make good decisions.

We charge 4 points and 15% interest only and that seems to price us a tad out of the market here but it is on purpose since we have limited capacity.

I have a friend that runs a rehab fund in CA and he gets 6 points and 10% interest. My borrowers would laugh me out of town if I charged 6 points and my lenders would laugh me out of town if I only charged 10%, so every market is truly unique.

I could loan at 70% as-is all day long but that would put me in the foreclosure bail out business and I have NO interest in that business. I like investors and I love being able to provide the strong ones with maximum leverage with our 100% loan to cost (LTC) loan.