How do I become a hard money lender?

[Joe Nagle]

I am currently an investor in the Philadelphia market. I have several rental properties paid off and was Interested in refinancing them and loaning the money at a higher interest rate. How do I start? What are some thoughts about starting this new venture. Thanks for your insight.

[Darren Eady]

Hey Joe.  I've been in the hard money space for some time and built up a couple HMLs.  It's not difficult to start, but there are a bunch of pitfalls in the first couple of years with lending your money on the wrong properties and with the wrong borrowers that will probably end up being a loss for you rather than a gain.  I have another solution for you that will accomplish your goals without potential losses.  Let's connect and I'll explain.

[Account Closed]

Originally posted by @Darren Eady:

Hey Joe.  I've been in the hard money space for some time and built up a couple HMLs.  It's not difficult to start, but there are a bunch of pitfalls in the first couple of years with lending your money on the wrong properties and with the wrong borrowers that will probably end up being a loss for you rather than a gain.  I have another solution for you that will accomplish your goals without potential losses.  Let's connect and I'll explain.

 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

[Billy Au-Yeung]

Hi Darren. I'd like to get connected as well. Can you explain to me as well?  Thanks

[Noelle Yarn]

I was just telling a friend of mine to do the same thing you are asking about. Darren would you mind sharing with me how someone would go about doing this? Thank you!

[Darren Eady]

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!

[RM Brown]

Hey Darren! I'd appreciate it if you would send me some more info. Thanks!

[Jamie Ware]

Once you have the liquidated cash at hand you market on sites like this.....many investors are looking for MONEY and if you have it and are willing to understand you will LOSE some of it you'll be great at lending.  How much do you have available to lend?

[David Friedman]

I'll pay you 8% per annum directly, to partner on some flips in California. I am not a HML. Just an investor looking to build a relationship with private investors. Read some of my previous posts to see some of the flips my team and I are working on.

[Alex Franks]

Originally posted by @Joe Nagle:

I am currently an investor in the Philadelphia market. I have several rental properties paid off and was Interested in refinancing them and loaning the money at a higher interest rate. How do I start? What are some thoughts about starting this new venture. Thanks for your insight.

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

[Jeff Rabinowitz]

    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.

[Jean G.]

... 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

[Ameer Alexander]

@ Darren 

Do you all lend in Florida?

[Jacob Sampson]

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.

[Max Matrin]

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

[Angelina McEwen]

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

[Eric Gunnet]

@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