Starting a new HML search for Louisiana investment

[Rogers Smith]

I've never used a hard money lender before, but with my first long-distance investment, I thought I'd give it a test drive. A little background: I am a developer, spec home builder, and occasional rehabber. Through a friend I ran across what appears to be a couple of promising investment opportunities in central Louisiana (CENLA), about three hours from my home. My friend is a contractor and would manage the jobs. My primary lender is a community bank with no interest in lending outside of their market area.

The two investments are SFHs next door to one another in a good part of town. They were purchased by a flipper, who decided to get out of the business in the beginning of the rehabs. One house is around 1,300 sf, which I can purchase for $30-35k, with estimated rehab costs of $30k. The other is roughly 2,000 sf, which will run $40-45k, with an estimated rehab cost of $40k. The comps in the area are roughly $100/sf, so it looks like I may be able to make some profit flipping them.

The lending terms I am hoping for would be:

• 70%ARV
• 80-90% purchase funding
• 100% rehab funding
• Draw schedule of 3-4 draws funded when the work is completed for each draw
• 12 month term, interest only payable monthly
• Interest rate 10-12% accruing only on the balance outstanding

Using BP's Network search I found a list of national HMLs who participate in Louisiana. I know, everyone recommends exploring local HMLs first. Thing is, in most Louisiana cities, local hard money lenders are few and far between. Additionally, I am exploring opportunities in other Gulf South states, so I would like to establish an ongoing relationship with a solid national lender with a presence in those states.

I've begun parsing the list I gleaned from BP by applying objective and subjective criteria. In fact, one of the most effective tools I am using is the BP forums. They provide a wealth of information from actual HML customers. With that said, here is my parsed list and some comments, in no particular order:

• Angel Oak: They look solid and reasonable. They are located in Atlanta, which is not too far from my home. Main critique I read was that they can be slow moving.
• RCD Capital: The have good reviews and participate actively in the Forums.
• Patch of Land: Lots of conversation in the Forums, looks like borrows are pleased with their performance. They have an office in Dallas, which is fairly close to the projects.
• Revolver Finance: Their terms appear reasonable, seem to be straight shooters (sorry), and based in Dallas, and a very cool name.
• Temple View Capital: Good terms, responsive, well-liked in the Forums, active in the Forums, which I like.

Ultimately, my question is, in which direction would the experienced borrowers on the Forums steer? Should I apply to each of them. If I do will I kill my FICO ( not great but 680) from all of the inquiries? Should I open a dialog with the reps from each firm, then apply to the ones I feel most comfortable with? Do any of them rise above the others for some quality I may have missed?

Thank you for any assistance you may provide, and for bearing with me throughout this rather long post.

Rogers Smith

[Caleb Jordan]

Originally posted by @Rogers Smith:

I've never used a hard money lender before, but with my first long-distance investment, I thought I'd give it a test drive. A little background: I am a developer, spec home builder, and occasional rehabber. Through a friend I ran across what appears to be a couple of promising investment opportunities in central Louisiana (CENLA), about three hours from my home. My friend is a contractor and would manage the jobs. My primary lender is a community bank with no interest in lending outside of their market area.

The two investments are SFHs next door to one another in a good part of town. They were purchased by a flipper, who decided to get out of the business in the beginning of the rehabs. One house is around 1,300 sf, which I can purchase for $30-35k, with estimated rehab costs of $30k. The other is roughly 2,000 sf, which will run $40-45k, with an estimated rehab cost of $40k. The comps in the area are roughly $100/sf, so it looks like I may be able to make some profit flipping them.

The lending terms I am hoping for would be:

• 70%ARV
• 80-90% purchase funding
• 100% rehab funding
• Draw schedule of 3-4 draws funded when the work is completed for each draw
• 12 month term, interest only payable monthly
• Interest rate 10-12% accruing only on the balance outstanding

Using BP's Network search I found a list of national HMLs who participate in Louisiana. I know, everyone recommends exploring local HMLs first. Thing is, in most Louisiana cities, local hard money lenders are few and far between. Additionally, I am exploring opportunities in other Gulf South states, so I would like to establish an ongoing relationship with a solid national lender with a presence in those states.

I've begun parsing the list I gleaned from BP by applying objective and subjective criteria. In fact, one of the most effective tools I am using is the BP forums. They provide a wealth of information from actual HML customers. With that said, here is my parsed list and some comments, in no particular order:

• Angel Oak: They look solid and reasonable. They are located in Atlanta, which is not too far from my home. Main critique I read was that they can be slow moving.
• RCD Capital: The have good reviews and participate actively in the Forums.
• Patch of Land: Lots of conversation in the Forums, looks like borrows are pleased with their performance. They have an office in Dallas, which is fairly close to the projects.
• Revolver Finance: Their terms appear reasonable, seem to be straight shooters (sorry), and based in Dallas, and a very cool name.
• Temple View Capital: Good terms, responsive, well-liked in the Forums, active in the Forums, which I like.

Ultimately, my question is, in which direction would the experienced borrowers on the Forums steer? Should I apply to each of them. If I do will I kill my FICO ( not great but 680) from all of the inquiries? Should I open a dialog with the reps from each firm, then apply to the ones I feel most comfortable with? Do any of them rise above the others for some quality I may have missed?

Thank you for any assistance you may provide, and for bearing with me throughout this rather long post.

Rogers Smith

 First question would be what is their minimum loan amount. Often it is hard to find lenders that go below 75k or 50k loans, it sounds like you could be in that range. That might narrow it down for you alone.

They may be able to tell you verbally what sort of and terms you could get without pulling credit. Others may want you to apply and do credit pull first before they spend their time going over things with you. So you'll just have feel that out.

If it were me I would put a lot of stock in how competent and responsive they are. ( Obviously  make sure the fine print makes sense too.)  If it seem like the loan officer knows what they are doing and will they work hard for you, then getting to know a lender who will close your deals and get you the info you need fast will help make you successful.