Private or Hard Money Lenders can be funny sometimes.

[David McBrayer]

Hello everyone and happy 4th of July!!!  I am getting ready to close on a house later this month. 7/15/16 is the closing date right now.  I was planning on doing some financing on this one but it has become a little difficult as the closing date is close.  So I was looking at Hard Money.  I had just bought a used truck and put it on a credit card and some dental work on a credit card and I wanted to pay them both off before applying for a conventional loan.  You know, make the credit score go up.  And yes they are paid off.  Even Hard Money Lenders like to see your credit, so I wanted to pay off the credit cards first and look the best I could for them.  You know, for our first date.  LOL

Well I have talked with a bank to start with about a line of credit and then a few Hard Money Lenders that happen to hear about here on Bigger Pockets.  The first one I just felt the rates were to high and I shut down talks with them without giving them a chance to see what else was out there? I did send them another e-mail saying I would like to see if they could do better?  They did not reply. But if that was their starting point? I don't think we could do business anyway.  But I was going to give them another chance.

Then another HL happens to be local to me and I chatted on the phone with the one guy.  Told him a little bit about what I was after and he said no problem.  So I thought i would pop in to go over my situation a bit more.  Well the way I was greeted in the office and the way they just assumed I was someone else and told me to take a card and get some information from my boss and send it to them.  I looked at him very strange, as I don't have a boss, and he said "Who Are You"  I am David McBrayer of McBrayer Investment Trust and I pointed at my tee shirt with that info on it.  I am looking to borrow some money for a project.  We spoke on the phone for a few minutes the other day.  He said, well we are about to have a conference call and I don't have time to talk with you right now, you need to let us know you are coming by?  Which I said, I totally understand, that is why when I was replying to your e-mail this morning at 5am and I mentioned I would stop in today around 2pm.  Ghee look, it is 2:05pm.  Funny, I did not get a reply saying don't stop by or make an appointment.  But I understand you are busy.  

So I took a card a left and I could see they were busy.  I sent them an e-mail and told them I was sorry we got off to a bad start.  In which I got a phone call to help straighten things out and get us back on track.  But then I go over the deal and what I am looking for and they think I am off my rocker or something?  Well this is a prime case of me knowing the area I invest in much better than than the potential lender does.  I need $30k to $40k to rehab a house that I am paying $55k cash for.  The Tax Value of the house in 2015 was $82k, and we know it is worth more than that!  The Zestimate right now is $80k and that is with it the way it is and them not saying it is a 3-2.  I am going to rehab it and make it worth $120k or more.  I figure on the low side with that estimate, it could be worth $150k or better.  But they were scared to lend $30k on something like that?  Or offer me any kind of deal.  They said I could offer up my two condos as more collateral!!!  And they can go take a hike.  I did not just fall of a truck and I was not born last night.  Thank you for your time.

Look, I do not mind giving up some of the profits to borrow some money.  That is business.  But don't play me for a fool.  The fee's and interest rate you pay a Hard Money Lender are pretty steep to start with, but it is all about what kind of profit you want to make at the end, how much of it you are willing to part with?  How fast you need the cash and how long you need it for?  Also a big plus is not as much paperwork as a rule or not as many people to approve the deal.  I offered up a good solid deal.  I was looking to finance the whole project or part of it?  I could put a down payment and finance the rest, I could pay cash for the house and finance the rehab?  But neither has happened yet.  Put I do have some plastic and properties paid off.  So I am not that worried.  Someone is missing a deal.

I have assets and money to pay for the house.  2 condos paid off and a piece of vacant land paid off.  Credit score is good and I do not owe much money at all.  My to credit to debt ratio is tiny.  Yet the Hard Money Lenders act like I am the risky one?  Well, it looks like you make $0 dollars on this deal.  How is that working out for you?  And a great chance you make $0 dollars on my next deal and the one after that.  It would be nice to be treated as a human and an investor! Rather than your next meal ticket.  As it looks like you are not eating.  Get those DOLLAR SIGNS out of your eyes.  It is not helping.  

The closing on this deal on the 15th regardless of rehab money.  I am taking bids on the work I want done and by the first of August I hope to be going strong with the rehabbing.  If I have to do the projects one at a time? I will.  I can refi a condo or something?  The bottom line is, I am trying to build up some business relationships.  Part of my problem is being a ghost for 8 years.  I show no activity on my credit report.  But yet I own properties and have money coming in.  Someone will get wise and want to partner with me or lend to me.  I do my research and I know the area where I like to invest.  The 2nd problem is, I am blunt and it can rub people the wrong way.  But just because you have some money to lend that I would like to borrow, does not give you that much control over me.  After all, I got the deal, not you.  And there are other Lenders out there that do just what you do.  Just like plenty of Investor's  out there that do what I do.  I just have not put my situation in front of the right lender yet.  So don't think I must have you.  As those are the deals that generally don't work.  The one's where the borrower is willing to walk away from?  Those generally do!

Everyone keep up the great work and invest wisely.  I hope you all have a safe and Happy 4th of July!!!