How do I become a hard money lender?

Question

Jeff Rabinowitz · Answer

Unless you are planning on lending other people's money or lending millions to people you have no connection to private lending is not as difficult or risky as Darren claims. (There is certainly risk but you can mitigate it.) Darren and other corporate HMLs would prefer potential lenders purchase the notes they have originated. That is understandable as it is how they earn more money. Their notes are not necessarily safer for you than the notes that you would originate yourself. When you purchase their notes you will assume all the risks built into those notes. When you lend to people you know, have formed relationships with, and whose projects you have vetted you may be better protected than you would be by purchasing a note.

It still behooves you to know the lending laws in your State and to know when you must be licensed for the activities you wish to pursue.

Darren Eady · Answer

You can either become a hard money lender yourself, which requires starting a company, website creation, legal assistance, program creation all to find yourself marketing a product that you have possibly little experience in, and potentially losing money for awhile . . . OR . . . you can work with a hard money lender that has been through all of that, knows what they are doing, and could use your funds to reimburse their loan money disbursed, and see if they will part with their performing mortgage notes.  I have created over 4000 hard money loans and sold the same amount of performing mortgage notes over the last six years.  The return is a simple 12% interest annually (paid monthly) through a fantastic servicing center.  It allows you to BE THE BANK without actually buying the bank!  Connect with me, provide your email, and I'll send you some more information.  Thanks!

Jacob Sampson · Answer

I would agree with @Jeff Rabinowitz.  Exactly like one aspect of the housing crisis, if they know they can offload all the risk, how much effort do you think they put into avoiding risky mortgages.  They lock up a mortgage and sell it off.

Jean G. · Answer

... or you could signup as an investor with Lending Home (you need to be accredited) and buy their notes (on a fractional basis, so you can spread funds across as many notes as you want). It's as easy as ACHing your money to them and clicking the notes you want to buy. The interest varies between 7 and 16% depending on the risk of the property and the borrower.

They typically sell most of their notes to private equity in bulk, but have started to open up to individual investors as well.

Jean

Alex Franks · Answer

Joe search out Jay Hinrich he has been in the lending side for many years. Probably going to give you the best answers. Stay close to home for now.  Go tot he local rei meeting, and explain you have funds for lending. Trust me you be knocking people away with a stick. Which I'm sure you post will attract a lot of opportunities as well.

Alex

Eric Gunnet · Answer

@Darren Eady

After seeing this thread on BP I’d like to have your insight on this approach.

Thanks,

Eric Gunnet

Contact using my name at g

Angelina McEwen · Answer

@Darren Eady could you please send me this info :)

Account Closed · Answer

Hey Darren I am reading that Nevada is one of the toughest state for hml as they do no allow asset based lending buy all borrowers including investors must show an ability to pay from a hml

"Even though it is a “hard money loan”, which historically has been based on the “equity” in the property, recent state and federal laws mandate that we document that you can make the payment. To do that, we must collect from you the last two years of tax returns and a bank statement. If you are employed, you should also be prepared to provide your paycheck and W2.

BUT:

We look at the documentation differently than a conventional lender does. Our ratios are not the same, we look at your credit differently, and we base the loans on “common sense”. We do not have a box that you must fit into. If there are mitigating circumstances on your loan, we listen to them. We don’t have a minimum credit score requirement. The credit scoring system is a mess, and needs to be fixed. These days, most people have a foreclosure on their records, or a bankruptcy, or a short sale, or a late credit card."

http://hardmoneylasvegas.com/read-this-first

Max Matrin · Answer

Being a private hard money lender can be exciting and rewarding. Making a large return on your investment can be enticing. In order to become a hard money lender, you will need to do the following:

1) Access to Money

2) High Risk and High Reward

3) Establish a Business

4) Get the Word Out

Ameer Alexander · Answer

@ Darren

Do you all lend in Florida?

How do I become a hard money lender?

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