Working With Hard Money Lenders

[Keith Resnover]

Hello everyone! Does anyone have any advise working with hard money lenders? Looking to do the Brrrr Strategy.

Thanks,

[Adrian Hills]

I will try to be as objective as possible. But my experience was my experience. I contacted 'DO HARD MONEY' sometime around Aug of 2020 (give or take a month or two.) I was sucked in by their 100% financing advertisement. I was presented with their $3000 fee to become a member in order to qualify for their financing. I paid the money, believing that financing would be made available to me on the projects that I was already working on. I had done my homework and vetted all the properties I was interested in. After taking a few weeks to learn my way around 'DO HARD MONEY'S' website, I began to use their models and calculators to determine if the deals fit what they deemed to be a good deal. Of course, no deal was good enough. So around Nov of 2020, I finally find a house that was a slam dunk. $37k purchase price with a modest $20k rehab budget, in a neighborhood that comped at around $110k with some recent comps as high as $124k. According to DHM's model, this qualified me for 100% financing. So the process begins, and right off the bat, I was to pay for evaluations that costed $500, and an appraisal.

My contractor and I had to do a video meeting with a DHM employee who had me walk down the street so he could see the neighborhood. Then we walked through the house. After we were done, my contractor and I parted ways. A few days later, he contacted me and told me that after having a pricing meeting with DHM, they decided that my rehab budget should be $37k, almost doubling my original estimate. So now, my $56k loan request is now $74k.

My closing date was set for Feb 12, 2021. On Jan. 8, I asked Brandon what our next steps were. He assured me that there was only a few minor things that needed to be signed off on, and we should be able to meet our closing date. AND closing would cost me about $20k. HOW DOES 100%FINANCING SUDDENLY BALLOON TO $20,000??? So around Feb. 1, I got a phone call from DHM, telling me that I had to get a 2nd contractor estimate. I had to scramble to find one. I live in L.A., and the property is in Ohio. So this was a daunting task. But I did it. Meanwhile, DHM requests an extension because we obviously weren't going to close on time.

Then they have a 2nd pricing meeting with the 2nd GC. Came to find out that the GC never even stepped foot in the house. So I went with a 3rd GC. Made sure he had access to the house through my agent. He completed the task and the pricing meeting. Then I get a call from DHM with a new closing date of Feb 22nd, giving me 10 days. They proceed to tell me that I needed a termite inspection. So I had to pay another $100 to get an inspection. I did that.

Then Feb 22nd came and went, and I get a call from Title, stating that there is an issue with DHM taking title with an assignable contract (which is a no no for a short sale.) So DHM wants me to send them the Articles of Organization of my LLC. They sent me back an ammended copy to allow them to basically take over my company, which I was vehemently against. They even tried to create their own LLC to get the deal done, and get my wife and I to sign off on it.

Because banks don't want to do assignable contracts on short sales, DHM is trying to angle to be the 1st lien holder, instead of just the lender. This raised red flags to the title company. So again, the closing got moved to mid March. But now the seller is frustrated, and doesn't wish to grant a 30 day extension. My agent is frustrated and informs me that because we went over our closing date, the taxes have now accrued and affected my deal even further, to the tune of $1500.

Finally, Title calls me back and informs me that they sent my deal to two different underwriters, and neither would insure title with DHM because there were too many questionable practices.

So not only have I lost out on the house, but I'm out of about $5000 dealing with DHM. Despite all the negative reviews I read, I thought it would be different for me. I couldn't have been more wrong.