How to become a Hard Money Lender in Florida?

Question

Hello guys,

I'm interested to become a hard money lender in the state of Florida. What is the requirement to become a HML in Florida? Do I need any license?

I have $ 500,000 in cash and willing to get into this type of investment. How should I start as a HML and how much profit can I expect each month and how can I expand it.

Regards,

John Thedford · Answer

You can lend your own money without being licensed. You cannot lend for others without being licensed. Rates vary. Make sure you comply with Dodd-Frank. I have been going HML for about 3 years now. Overall, I am pleased...but have learned a few lessons along the way. Get a good attorney to help guide you.

Grigory Pekarsky · Answer

When it comes to becoming a hard money lender in Florida, there are some things that you have to do right off the bat before anything else. It's important that you have an LLC or Corporation set up because of tax purposes and liability reasons, as well as having appropriate licenses depending on where your business is located at. If you're unsure about what kind of licenses or permits are necessary, then consult with an attorney first. Once everything has been taken  care of, this is when you can actually get your business up and running. It's important that you have certain things in place so that if someone were to come to you for a loan, they would be able to get enough information from you to make their own decisions on whether or not they want to do business with you. So what are some of the things that potential clients will look for when going through lenders? Well, there are a lot but we'll just go over a few in the interest of time: having testimonials from past clients online and offline depending on which platform works best for them, licensing information easily accessible, etc.

John Thedford · Answer

Hello @Gregory Emmer. I have read the statutes and even had someone threaten to turn me in for advertising as a HML. I told them to go ahead if they were so inclined. The statute states one exemption to be "(e) An individual making or acquiring a mortgage loan using his or her own funds for his or her own investment, and who does not hold himself or herself out to the public as being in the mortgage lending business.". Now, to slice and dice the words, meaning, etc.......I routinely advertise I lend money. On my CL ads, they state that I am a private lender, not a mortgage company, lending my own funds for my personal benefit. Am I in the mortgage lending business? No. My ads state I am a private investor lending my own funds for my personal benefit. I guess DBPR COULD send me a C&D Letter but I would find that surprising because of the wording that states I am NOT a mortgage company and not in the mortgage lending business, and that I am doing these loans with my funds for my personal benefit.  Who knows? Our government can be full of surprises. If something changes, I will post it on BP (providing they offer laptops and wi-fi in the cell):):):)

Gregory Emmer · Answer

Hi Account Closed,

The OFR, in conjunction with Dodd-Frank, has basically drawn a line in the sand, differentiating between who needs a license and who doesn't.  A person who lends their own money, and does NOT hold themselves out to the public to be in the lending business does not need a license.  However, so much a posting on these forums stating you are a HML could be enough to require a license...depends how nice the regulators want to be.  Also, as stated previously, lending other people's money requires a license.  My one suggestion...BE CAREFUL!  The OFR has mandated that they are looking to halt unlicensed activity (if they can, who knows), but they are also going to be auditing all licensed LO's and licensed lenders before the end of 2022.

David Dey · Answer

Number 1) get yourself a good real estate attorney!!

Number 2) get yourself an LLC like someone had suggested on here.

Number 3) Become well versed in the market you will lend in.  (Most lenders like to lend within an hour of their home, that way they can drive by the property, before and during the loan)

Number 3) trust but verify!!!  (What I mean is this, many people will come to you with the "greatest deal ever!!"  And some of them may be great, but you need to do your own due diligence, both on the deal and the borrower.  And use this as your main guideline, "would I buy this property as an investment for what my loan amount is?"  If the answer is yes, then proceed to your due diligence.  If the answer is no, then I don't care how good their credit is or their exit strategy, it's a dangerous loan and I wouldn't do it.

Remember, the final recourse for a lender is to take the property back.  If you have to go after a judgment then you lent wrong in the first place.

These are a few pointers that will keep you safer.  HMLending can be an incredibly profitable business, but it is not a get rich free scheme either.  You need to be educated in what you're lending on.  That's why the normal evolution to an HML is property investor to private lender.

Hope this helps

Steve Babiak · Answer

How to become a Hard Money Lender in Florida?

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